Britain’s financial regulator this week announced a crackdown on high-interest lending. The measures, designed to protect millions of people who use high-cost credit, will affect ‘rent-to-own’ shops that sell white goods for small weekly payments. Shops like Brighthouse will face a price cap similar to limits on payday loans.
As part of the review the FCA looked closely at the rent-to-own sector. Costs for the 400,000 customers can be high – sometimes exceptionally. The FCA has seen examples where people have paid over £1,500 for essentials like an electric cooker, which could be bought on the high street for less than £300.
Colin Metcalfe of St Albans District Credit Union reacted to the news by urging more people to consider one of its affordable loans to buy the things they want at much lower cost.
“People should think of us before signing up to a rent to own agreement. Our loans can cost as little as 1% per month (0.48% for Homeowners), meaning the total cost of buying, say, a cooker or TV would be a fraction of what you might pay at a typical rent-to-own shop.”
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