Buying merchandise on credit has legal consequences
Buying on credit has become so common that we often take it for granted without fully understanding the legal consequences. You should never accept the invitation to "buy now and pay later" without being fully informed of what is involved.
When you buy on credit, you ultimately pay more money, since interest and other charges are added to the cash price of the merchandise. Additionally, you may be asked to sign a contract of sale known in legal terms as a "security agreement." The security agreement spells out how the merchant or finance company can repossess the merchandise if you should fail to make the payments.
There are four simple steps you should take to protect your best interests before you buy on credit.
- First, shop and compare. The interest rates and terms of payment can vary depending on where and from whom you make the purchase.
- Second, always deal with an established and reputable company which will stand behind its merchandise.
- Third, read and understand all documents before you sign them.
- Fourth, if you have questions, call your lawyer. In many cases, your questions can be answered on the phone without an office consultation.
The most common method of buying on credit usually involves a credit card and "revolving credit." In this arrangement, the issuer of the credit card is loaning you the money for the purchase and charging you an interest rate for paying back a percentage of that owed, usually on a monthly basis. The issuer must inform you of the requirements of the credit arrangement in writing.
If your credit card is stolen or lost, or used without your authorization, you should notify the issuer immediately. Once you have done so, you are no longer responsible for any subsequent unauthorized use of the card.
If you receive a credit card that you have not requested, you are not liable for any use of the card unless you have indicated acceptance of the card by signing it or using it.
Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.
© Illinois State Bar Association
If you have questions about the application of the law in a particular case, consult your lawyer. The law is constantly changing. Information on this site or any site to which we link does not constitute legal advice.