Price cap plan for rent-to-own sector

Media playback is unsupported on your device

Media captionMichele Jacques found rent-to-own meant paying over the odds for her cooker

Plans to cap the costs of buying domestic goods such as TVs and fridges through rent-to-own shops have been welcomed by the stores’ customers.

Michele Jacques, from Droylsden in Manchester, ended up spending £700 on a cooker as a result of interest rates that can reach 99% a year.

Recommended For You

Viral Video Jackpot PLR V1 - Upsell

Complete PLR Business with 10 High-Quality Video Social Media Memes,10 Eye-Catching Static Social Media Memes,10 Unique Articles,10 Enthralling Articles on other aspects of Asian Cooking (Sales material are included)

Explaindio

The #1 Animation, Doodle Sketch, and Motion Video Creation Software.

Had she gone to a High Street shop, it could have cost her as little as £250.

The proposals from the Financial Conduct Authority (FCA) mean rent-to-own customers would pay much less.

Rent-to-own customers make monthly payments, in effect renting goods until they have paid in full.

“Interest rates should be capped. They shouldn’t be allowed to make so much profit from vulnerable people,” said Ms Jacques.

“It does make you frustrated. It makes you angry.”

Recommended For You

Mobiflux Elite Monthly

Mobiflux is the first ever Wordpress plugin that lets you capture and multiply your mobile traffic. It’s twin action system gives you the ultimate in traffic and lead generation no matter what you are marketing online.It not only capture and harness your

Memester - Mighty Memes Pro

Mighty Memes pro is the only professional meme static image meme marketing software that handles everything from meme creation to meme publishing. You get access to a library of more than 700 ready meme templates that can be customised with your own capti

StockKosh Reseller 500 Licenses 3 Pay

500 StockKosh Reseller Accounts. Resell them and earn as much money as you want.

She said the cap proposed by the FCA was “the correct thing to do”.

How will the proposed cap work?

First, the FCA will limit the amount of interest that customers pay.

From April 2019, they will pay no more in interest than the cost of the product itself. So if a cooker costs £300, they will pay no more than £600 in total, including the cost of credit.

However, rent-to-own shops will still be able to charge for insurance and warranties on top of that.

Second, the cost of the goods themselves will be limited.

Shops will be able to charge no more than the median – i.e the middle price – of three mainstream retailers.

Andrew Bailey, chief executive of the FCA said: “Today’s measures are designed to bring down very high prices in the rent-to-own sector, which is used by some of the most financially vulnerable in our society.

“A cap will prevent firms charging over the odds for essential everyday items like cookers or washing machines. We believe a cap is the only intervention that will effectively tackle the highest prices.”

Recommended For You

Trending Traffic - One Time

Harness the power of trending viral content and skyrocket your visitors and social engagement. This system scans the most popular sites to constantly find the best content to share to SUCK in that traffic on autopilot.

TigerPress Volume 9 White Label

Adds additional functionality to TigerPress themes so they can be white labelled.

VidRankXpress Elite

A Revolutionary 1-Click Software Turns ANY Video into Endless Traffic Machine That Gets Page 1 Ranking on YouTube and Google and Drives Tons of Traffic from TOP Social Giants on 100% Autopilot.

How much will consumers save?

The FCA says the cap could save about 400,000 consumers up to £22.7m a year.

In a series of examples, someone who buys a Hotpoint cooker on a rent-to-own basis could save as much as £606 over a three-year period, or £3.88 a week.

Someone buying an Indesit fridge freezer through rent-to-own could save £360 a year, or £2.31 a week.

How have rent-to-own shops reacted?

The main providers of rent-to-own goods are Brighthouse and PerfectHome.

Image copyright Getty Images

A BrightHouse spokesman said: “BrightHouse has been working closely and constructively with the FCA over a number of years. This comprehensive process has led to many changes in the way we operate as a business and serve our customers.

“We’re going to carefully consider today’s announcement, while continuing to offer those excluded from mainstream credit ways to get the household goods they need.”

PerfectHome said it too would consider the plans in detail.

What do consumer groups say?

The proposed cap was welcomed by the debt charity StepChange, The Money Advice Trust, and by Citizens Advice.

“This cap is a victory for people who struggle with the runaway costs of rent-to-own agreements,” said Gillian Guy, chief executive of Citizens Advice.

“A cap gets to the heart of the problem by stopping costs from spiralling out of control and pushing people into further debt.

“Our evidence has repeatedly shown that well-designed caps can reduce the harm high-cost credit can cause, as they have done in the payday loan market.”

However Andrew Hagger, a personal finance expert at Moneycomms, said rent-to-own goods will remain expensive.

“The measures are long overdue and will help, but you have to question whether a 100% mark up is acceptable.

It’s a big shift in the right direction, but in essence customers can end up paying double the retail price which still seems excessive.”

Original Article : HERE ; This post was curated & posted using : RealSpecific

Thank you for taking the time to read our article.

If you enjoyed our content, we'd really appreciate some "love" with a share or two.

And ... Don't forget to have fun!

Recommended Products

Covert Context Pro

5000+ Top Amazon Keywords and 1-Click Importer To Covert Context

WP Conversion Boost Personal License

Instantly boost conversion with super targeted pages.

Moola Vine Traffic Coop VSL (3 Shares)

3 Shares in the Moola Vine Traffic Coop VSL

Leave a Reply