Free ... Lowest price ...
Guaranteed ... Lifetime warranty! These are the terms most retailers
scream at us through television, radio and print advertising. They're
known in the advertising industry as attention getters.
The trouble with many of these
claims is most of them include barely readable fine print buried at the
bottom of the last page of most sales contracts.
The fine print is what consumer
activists call the "Gotcha" clauses - or in real estate they're called
weasel clauses. The name comes from the ability of a seller to weasel
out of a deal because of a small clause in the fine print.
A recent consumer group did
a study and found that less than 10% of the people who sign contracts
read the fine print. They also discovered only 48% review it and 42%
totally ignore the fine print.
This explains why complaints to the FTC, Better Business Bureau and other consumer protection agencies grow each year.
Many consumers ignore the fine print and later experience everything from mild surprise to outright shock.
One of the most popular statements after a consumer complaint filing is "I should have read the fine print."
I admit it's a hard chore to
read the fine print after finding that special product or service at
the right price. Dollar signs and marketing tactics often blind us from
wanting to read the fine print. Right?
Even that too-good-to-be true
offer can often overshadow the importance of at least reviewing the
fine print. But the habit of ignoring the fine print can come back to
bite you if you continue to ignore it.
Of course this is what most shady,
over priced, fly-by-night businesses hope you do. You'll also find many
well known Fortune 500 companies making it harder to read or understand
the fine print.
Take for example the bank,
department store and gas cards. The language and terms in the contract
seems to require a minor law degree to understand. Right?
This doesn't happen by accident,
it's often meant to discourage you. It's funny how the marketing or
sales message is never that small, is it?
To encourage you to read the fine print more, I'll point out the areas you should look for in the average sales contract.
Make it a point to at least
review the following points before signing on the dotted line. Doing
this one habit alone will help you avoid many stinging problems hidden
in most fine print contracts.
Places where you should read the fine print
I. Real Estate Loans
Prepayment penalties -
Does the lender impose a prepayment penalty if you pay the loan off before a certain date (usually 3 to 5 years)? If they do how much will they charge?
Private Mortgage Insurance (PMI) -
If you pay less than 20%
as a down payment, your lender will require you to buy PMI, which
protects the lender in case you default.
The cost is usually half of
three-quarters of a percent of the loan. Read the fine print and make
sure you're informed on how to cancel the P.M.I after your home equity exceeds the 20%.
II. Credit Cards
Credit cards are notorious for tacking on fine print "Gotchas" because they know most people don't bother to read them.
Notice how the credit card company calculates the interest payment.
For example, one credit card
calculates using the two-cycle billing method for calculating interest
on your outstanding balance. This quietly dings a customer with finance
charges even during months they pay their balances in full.
What happens if you're late with a payment or you exceed your limit?
This is where most credit card companies really lay it on you thick.
Late fees, extra interest and
the many perks offered vanish ... including any introductory rate you
may have received from the Card Company.
III. Cell Phone Service
Your cell phone service contract fine print can challenge many attorneys. But you should make sure it contains these clauses.
Free mobile to mobile, free roaming and free long distance somewhere on the contract.
If a salesperson promises you a benefit asks them to show you in the contract or ask them to place it there.
Here's the fine print in insurance policies you should pay special attention to:
Exclusions.
This section tells you what's not
covered in your policy. Many people who ignore this section discover a
surprise when they go to make a claim. Not covered for that (Yikes)!
Conditions.
For example, procedures for filing a claim, steps to settling any disagreements and of course payment obligations.
Definitions.
This section states the specific terms and your rights as the policyholder and the rights of the insurance company.
Conclusion
If you take the time to at least
review the fine print in contracts, sales agreements and even sales
receipts you'll make better buying decisions.
Make sure when you comparison
shop to read the fine print. Why? Because that special dream price
could quickly turn into a nightmare if you don't do it.
