November is Financial Literacy Month, and that means
teaching consumers what their rights and options are. The best place to start teaching consumers
about financial literacy would be our young adults heading out into the
world.
Our school curriculum is starting to teach about financial
literacy, and that is excellent, but it doesn’t deal with harsh realities such
as collection agencies, car repossessions, poor credit decisions that could hamper
your credit rating for years, or the struggle with high interest debt. So, we are dedicating all our articles this
month to helping young people in Canada avoid pitfalls of consumer credit.
If you are just heading out into the world, you are going to
be tempted with a lot of contracts. If
you want to purchase a car, a cell phone plan, rent an apartment, get a gym
membership, or acquire a credit card, you will have to sign for it. Before you commit yourself, you need to
beware a number of potentially dangerous mistakes.
Breaking The Contract
If you don’t make your payments, or try to end the contract
early, there may be a penalty or consequence for not finishing your term. Be careful what you commit yourself to. For example, if you purchase a car on credit,
and fail to make your payments, the finance company has the right to repossess
your vehicle, auction or resell it, and then pursue you for the balance – this
can mean you will likely owe a large balance, for a car you no longer have -- be
careful!
You won’t know your rights if you don’t keep a copy of the
contract! Make sure you get a copy of
anything you sign so you know what you have agreed to, and keep it somewhere
safe. You may need to hold the creditor
to the terms they have agreed, and show them the terms they agreed to as well,
even after the agreement runs out.
If you sign a contract, it doesn’t matter who uses the
service, you are personally responsible.
This goes for car loans, cell phone contracts, apartment rentals – if
you are going to use something with a roommate, boyfriend or girlfriend,
brother or sister, everyone should sign for it.
That way, if something goes wrong, everyone is responsible, which means
it’s less likely you will get stuck with “the check”. This is called being “jointly and severally
liable”, meaning everybody who signs owes the full amount owed until it is paid
by someone.
When you are handed a contract with tons of small print, you
don’t have to feel rushed to sign it. In
fact, you can ask to take it home, read it over (maybe even show it to someone
you trust), and come back the next day.
If you don’t read the contract, or you weren’t aware of what you agreed
to, that won’t protect you when things go wrong. Make sure you are comfortable with all the
terms you are signing for.
No one should learn these lessons the hard way -- print this
article out for yourself, or give it to your teenagers, your younger siblings,
or someone you know who is struggling with their finances as they go out into
the world as adults. People have a right
to know how to manage their finances, before they get in deep trouble.
If you want more information about financial literacy, the
Financial Consumer Agency of Canada has more resources available for Financial
Literacy Month here:
As well, if you are in the
Cambridge/Kitchener-Waterloo/Guelph area and would like to attend a free credit
workshop where we cover this topic and more, as a service to the community, you
can find information here:
If you have any questions about contracts, or would like more
information to help you learn about your finances, feel free to contact
myself. My direct line at Kingston Data
and Credit is 226-444-5695.
Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
bwettlaufer@kingstondc.com
Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
bwettlaufer@kingstondc.com
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