Study of Efective Rate applied in electrodomestics Stores in Ecuador

Abstract

This study analizes the annual effective rates (AER) applied in the Ecuadorian electrodomestics stores, showing discrepancies with the Consuming rates of the Central Bank, that vary between 16,29% and 16,77%. With an inductive focus, collecting data of 24 products in national stores in Manta, revealing that the average AER is 168,65%, with a minimum of 88,34% and a maximum of 481,68%. The rates were calculated using the yearly and interpolation formulas, considering the regular price and the cost of the credit. TVs showed lower rates, while cell phones were higher. The study shows a lack of transparency from the store, which impose higher costs to consumers, who do not know the financial implications of the credit.  This behavior, which is not related with the Ecuadorian financial laws, persists for the absence of effective regulations and sanctions from entities like Defensoría del Consumidor. Although, the consuming credit eases the purchase, takes risks like excessive debt and the payment of the final prices are much higher than the real one. This study highlights the urgent necessity of a much stronger regulatory law, alongside financial education campaigns for consumers, to highlight the importance of protecting the population of this abusive practices.