Interest-free? Yeah right

Be careful when entering 'interest-free' hire purchase agreements
Hire purchase can seem like a great way to pay when you haven't got the money right now. But have you ever stopped to think how much you may actually end up paying for that TV or lounge suite? As well as any interest charged, often there will be additional costs like establishment and account fees. Here are eight rules for getting your HP sorted:
1. Always ask the retailer to tell you all the fees and charges you must pay.
2. If the deal offers 0 per cent interest, ask what the interest rate will be on balances left at the end of the interest-free period.
3. Ask for a copy of the ''disclosure statement'' detailing all the terms of the credit deal and read it carefully before you agree to the deal. By law you must be given this statement before you sign or within five working days of signing.
4. Compare the charges and fees with the price of what you are buying. It may be that the charges amount to more than the interest you would pay on a different sort of loan or your credit card.
5. Work out the total interest you will pay on your purchase with the Get into Debt calculator on www.sorted.org.nz
6. Only commit to a 0 per cent interest hire purchase or credit sales agreement if you are sure you can repay most, if not all, of the debt in the interest-free period. That way you will avoid high interest rates on unpaid balances.
7. Avoid taking on several hire purchase or finance deals at once. It can be difficult to keep track when each deal has to be paid off and it can be hard to find the money to service many debts running at the same time.
8. Take your time to decide. While, by law, you have three working days after you receive a disclosure statement to change your mind and withdraw from the hire purchase or finance deal, you will still have to find a way to pay for the purchases you made.
Remember ? getting into debt is easy, getting out of it is much harder.