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        Is it legal for motorcycle dealerships to sell their units only through financing?

        We get the opinion of two practicing lawyers
        by Aris Ilagan Oct 9, 2020
        PHOTO: Aris Ilagan

        The COVID-19 pandemic has forced many commuters to look for alternative modes of mobility due to the acute shortage of public transportation. This is the main reason behind the sudden surge in demand for bicycles and motorcycles. 

        When purchasing a vehicle, you can either pay for your unit fully in cash, or by installment. It’s understandable that in these critical times, many consumers avail themselves of financing offers, but there are others who want to pay in cash because they have enough savings, and they don’t want the headache of dealing with hefty monthly payments and interest charges.

        Lately, Top Bikes Philippines is being flooded by inquiries from motorcycle buyers who’ve been told by some sales agents that units are only being offered through financing, and there are none available for cash purchases. “Sorry po, installment lang po ang available,” sales agents say. The issue is fast becoming rampant in dealerships selling scooters and underbones.

        Continue reading below ↓

        This leaves buyers in disbelief ,especially when they can see in the dealership a fleet of their chosen motorcycle model, and even though they have the full payment amount ready, they can’t bring home a unit.

        Is selling a motorcycle only through financing legal?

        Attorney Denden Calderon, a staunch advocate of motorcycle riders’ rights, shares with us his insights on the issue: “A buyer should have the option to purchase a motorcycle by cash or avail of the credit facilities of the seller. But if the seller pushes for financing despite the ability of the buyer to purchase in cash, dapat violation yan,” he says.

        He cites Section (e) under Article 52 of Republic Act No. 7394 or the Consumer Act of the Philippines, about ‘unfair or unconscionable sales act or practice.’ According to Calderon, this provision can make a dealership liable when the deal that “the seller or supplier induced the consumer to enter into was excessively one-sided in favor of the seller or supplier.”

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        If found guilty, the violators will be made to pay a penalty not less than P500 but not exceeding P10,000, face imprisonment of not less than five months but not more than five years, or both.

        Calderon’s advice is to bring up the matter with the Department of Trade and Industry before entertaining the idea of taking it to the court. “Kasi sila ang may primary jurisdiction with respect to consumer welfare,” he explains. “Pangalawa, it would entail time money and effort kapag idadaan pa sa court.”

        Attorney Robb Consunji, our legal expert at Top Gear Philippines, has a slightly different view: “I doubt it’s an unfair practice. The buyer is to choose the shop and term of sale. But, if the buyer is ‘baited’ into buying and later surprised that it must be by financing only, that is an unfair sales practice,” Consunji points out.

        “The acts of the dealer—from advertising, sales talk, and contract closing—have to be considered. Sales talk is not punishable (under the law). Deceit is punishable.”

        Continue reading below ↓

        Calderon is talking from personal experience. Four years ago, he thought of buying a scooter from a local dealership and was given the “financing only” line. But when he told the sales agent that he’d been passing by the showroom and witnessed the actual unloading of the units from the delivery truck, he was suddenly offered a unit in cash.

        Do you think there was a deception that happened then? Feel free to share your comments.

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        PHOTO: Aris Ilagan

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