Forum: Total debt servicing ratio should apply to retailers' instalment payment plans

A photo showing consumers at an electronics fair.
A photo showing consumers at an electronics fair. PHOTO: ST FILE

I read with incredulity about the naivety of consumers who take up loan offers charging hefty interest rates and the lack of conscience on the part of retailers to offer the loans (When a $6k TV ends up costing more than $16k, Nov 6).

We live in a world of consumerism, where modern comforts have gradually become "must-haves". Consumers take pride in getting the best and latest products, and this desire spirals many into debt.

Retailers see opportunity in such human weakness and offer consumers a chance to enjoy the desired product at a so-called low cost. When the consumer cannot pay the subsequent instalments, he is likely offered another instalment plan. And the instalment payments start all over again.

Such practices are very abhorrent yet common in the lifestyle retail business. There should be a rule to stop such practices. As with the total debt servicing ratio for housing loans, a ratio of a consumer's total debt obligations must be taken into consideration in such cases too. Never overspend, as we are ultimately liable for the loans we take while enjoying the products.

Foo Sing Kheng

A version of this article appeared in the print edition of The Straits Times on November 13, 2019, with the headline 'Total debt servicing ratio should apply to retailers' instalment payment plans'. Print Edition | Subscribe