Caveat Emptor , or let the buyer beware, is a fundamental law in property buying and selling. The buyer is expected to make enquiries and be sure that he is getting what he thinks he is getting. Once the sale is done, he cannot moan about defects that he subsequently finds out.
These days the principle is better deployed in financial transactions. Banks and finance companies spin a complex web around even seemingly simple products. For the mathematically challenged, like yours truly, this is a landmine waiting to explode.
Take the case of an apparently new innovation – teaser home loans. These are loans where the interest rate is fixed at a very attractive rate for a pre determined period and then made floating plus margin thereafter. Buyers are enticed by the low initial rate and don’t realise the consequences of a subsequent high floating rate. Once hooked by the teaser, they are sunk.
Buyers certainly deserve their misfortune if they jump into something blindly. If 2+2 is a very complex equation for you, please get the neighbourhood Einstein to advise you. And beware of anything that looks too good to be true – as we have said a million times before, it sure is too good to be true. Why is it that very intelligent people fall a sucker all the time to that “great” deal. If you are greedy, you deserve the misfortune and no sympathy.
But its not so straightforward as that. Banks thrust a zillion documents at you to sign, with no chance of reading, let alone comprehending the fine print. The legal gobbledegook provides a perfect cover for every coercive activity under the sun. For eg, many a time banks require you to sign a blank promissory note for a loan. Can you imagine that ? A blank promissory note ? Even Shylock didn’t stoop to such levels.
Banks who introduce mind numbing complexity under the guise of innovation deserve to be dealt with in the same way as Singapore deals with people who commit that nation state’s most cardinal offence – peeing in the lift ! In consumer banking you are dealing with laymen – not corporate treasurers (although the distinction sometimes is rather fine). Caveat emptor cannot be used as the fig leaf when something is blatantly incomprehensible to even the guy selling the stuff.
Banking, especially to consumers should become a boring business. Less innovation and more straightforwardness. Fire the suits and ties. Recruit the guys in langots. Before you see a loan, tell the guy a hundred times why he should not take a loan. If warnings such as “remove the baby before folding the pram” is required by law, why isn’t there stringent warnings required before plunging into financial madness. Like teaser loans.
All applicants for loans must be told to hold their ears and do 1008 thoppukarnams (a form of punishment usually meted to young boys in South India), before they become eligible for the loan. Given that most are anatomically ill equipped to complete this task, they would hopefully give up and go away. At least they earn the religious piety that the act of thoppukarnam confers. Thank God for small mercies.
These days the principle is better deployed in financial transactions. Banks and finance companies spin a complex web around even seemingly simple products. For the mathematically challenged, like yours truly, this is a landmine waiting to explode.
Take the case of an apparently new innovation – teaser home loans. These are loans where the interest rate is fixed at a very attractive rate for a pre determined period and then made floating plus margin thereafter. Buyers are enticed by the low initial rate and don’t realise the consequences of a subsequent high floating rate. Once hooked by the teaser, they are sunk.
Buyers certainly deserve their misfortune if they jump into something blindly. If 2+2 is a very complex equation for you, please get the neighbourhood Einstein to advise you. And beware of anything that looks too good to be true – as we have said a million times before, it sure is too good to be true. Why is it that very intelligent people fall a sucker all the time to that “great” deal. If you are greedy, you deserve the misfortune and no sympathy.
But its not so straightforward as that. Banks thrust a zillion documents at you to sign, with no chance of reading, let alone comprehending the fine print. The legal gobbledegook provides a perfect cover for every coercive activity under the sun. For eg, many a time banks require you to sign a blank promissory note for a loan. Can you imagine that ? A blank promissory note ? Even Shylock didn’t stoop to such levels.
Banks who introduce mind numbing complexity under the guise of innovation deserve to be dealt with in the same way as Singapore deals with people who commit that nation state’s most cardinal offence – peeing in the lift ! In consumer banking you are dealing with laymen – not corporate treasurers (although the distinction sometimes is rather fine). Caveat emptor cannot be used as the fig leaf when something is blatantly incomprehensible to even the guy selling the stuff.
Banking, especially to consumers should become a boring business. Less innovation and more straightforwardness. Fire the suits and ties. Recruit the guys in langots. Before you see a loan, tell the guy a hundred times why he should not take a loan. If warnings such as “remove the baby before folding the pram” is required by law, why isn’t there stringent warnings required before plunging into financial madness. Like teaser loans.
All applicants for loans must be told to hold their ears and do 1008 thoppukarnams (a form of punishment usually meted to young boys in South India), before they become eligible for the loan. Given that most are anatomically ill equipped to complete this task, they would hopefully give up and go away. At least they earn the religious piety that the act of thoppukarnam confers. Thank God for small mercies.
