Motorcycle price on installment is 25% higher than cash – DTI

Price of motorcycles sold on installment payment is 25 percent higher than the cash price of the unit, according to Trade and Industry Secretary Ramon M. Lopez.

Lopez said this was found out by the DTI as it conducts public hearings on the draft Memorandum Circular that will promote payment options in consumer transactions and prohibit the selling of goods and services on installment basis only.

According to Lopez, the difference in price for motorcycles on installment payment is 25 percent higher than the price for cash payment. The higher prices of the unit for installment payment is due to the high interest rate, he said.

Lopez stressed the need to give consumers the choice to pay in cash to save on cost, especially if they have savings to pay their purchases in cash.

From January 2019 to January 2021, the DTI received 3,060 complaints from consumers on the installment only payment option that motorcycle dealers and shops implement. Complaints reported that the seller of motorcycles insist that they pay in installment even if they are willing to pay the full value in cash.

Consumers should be provided with payment options when purchasing products and services noting the practice of a number of retailers in requiring installment only sales, the DTI sees the need to reiterate the applicable provisions of the Consumer Act of the Philippines and other relevant laws to ensure that consumers are adequately protected.

To address such concern, DTI Consumer Protection Group (CPG) Undersecretary Atty. Ruth B. Castelo explained, “The DTI steps in to address this consumer concern on limiting his/her options to pay not only for motorcycles, but also for other products and services that he/she needs.”

DTI-CPG Assistant Secretary and DTI-CPAB Concurrent OIC Atty. Ann Claire C. Cabochan explained, “Through this circular, the DTI also aims to emphasize the consumer’s right to choose and have access among the various options in purchasing products and services, including the mode of payment.”

Under Article 52 of the Consumer Act (RA 7394), “An act or practice shall be deemed unfair or unconscionable whenever the producer, manufacturer, distributor, supplier or seller, by taking advantage of the consumer’s physical or mental infirmity, ignorance, illiteracy, lack of time or the general conditions of the environment or surroundings, induces the consumers to enter into a sales or least transaction grossly inimical to the interests of the consumer or grossly one-sided in favor of the producer, manufacturer, distributor, supplier or seller.”