Dispatches, Christmas on Credit. Watch it on 4OD

PasturesNew

Looks like we all missed another joyous TV moment.

As banks and building societies close their doors to all but the least 'risky' borrowers, Dispatches reporter Jane Moore investigates a highly lucrative financial industry that has stepped in to provide loans to the millions of people denied credit elsewhere.

She discovers that many of the loans offered by some of these doorstep operators, payday lenders, and rent-to-buy companies come with sky-high interest rates that can financially overwhelm families already steeped in debt. And the sting in the tail is that these loans are entirely legal.
While the Bank of England's rate remains at an all-time low, these companies are able to charge whatever interest they like.

The programme asks why the Government has resisted calls to impose interest rate 'caps' on the various loans on offer, allowing the market to be so under-regulated that foreign loan companies are switching their operations to Britain.

In the run-up to Christmas, the impact of these high interest rate charges can be financially devastating for some families. Dispatches visits areas of the country where whole streets, and sometimes virtually entire estates, are in hoc to such lenders.

Watch it online on 4OD: http://www.channel4.com/programmes/dispatches/4od#3015290

lemonjelly

Saw part of this last night.

Bright House. 29.9% APR. Plus - prepare to be shocked - they add on all sorts of extra charges for stuff that you don't need & is in fact optional.

It is PPI all over again.

Part of me wonders why companies like Bright House are able to sustain themselves. Then again, I suppose they just manage by selecting the most vulnerable sectors of society who are less aware of their consumer rights, or less able to comprehend the implications of 29.9% APR. Or are just less likely to say "do I have to have that insurance, or is it optional?"

One thing, the programme identifies that the goods are on a rent to buy scheme. What they actually are is a Hire Purchase agreement, which gives the consumer less rights & increases charges.

One other thing. rofessionally speaking I find Bright House to be scum. Unfriendly, at best they are less than honest, one of the quickest companies to add on all sorts of costs, soul-less, unsympathetic, and unreasonable.

If they went bust, I would jump for joy. & sorry to say it, but I have encountered their staff, and wouldn't shed a tear for them either.

abaxas

lemonjelly wrote: »

Saw part of this last night.

Bright House. 29.9% APR. Plus - prepare to be shocked - they add on all sorts of extra charges for stuff that you don't need & is in fact optional.

It is PPI all over again.

Part of me wonders why companies like Bright House are able to sustain themselves. Then again, I suppose they just manage by selecting the most vulnerable sectors of society who are less aware of their consumer rights, or less able to comprehend the implications of 29.9% APR. Or are just less likely to say "do I have to have that insurance, or is it optional?"

One thing, the programme identifies that the goods are on a rent to buy scheme. What they actually are is a Hire Purchase agreement, which gives the consumer less rights & increases charges.

One other thing. rofessionally speaking I find Bright House to be scum. Unfriendly, at best they are less than honest, one of the quickest companies to add on all sorts of costs, soul-less, unsympathetic, and unreasonable.

If they went bust, I would jump for joy. & sorry to say it, but I have encountered their staff, and wouldn't shed a tear for them either.

Could you not change the words 'Sh1tehouse' for 'Labour goverment' and it would mean the same?

PasturesNew

Brighthouse though are just like the old catalogues, but you get to see the stuff/take it away.

Catalogues always provided things for people for years on a "weekly amount" basis. Your mate would have a catalogue, choose what you want, they order it, you pay weekly through your mate.

Out,_Vile_Jelly

I saw a bit of this last night. Proof that my family are definitely middle class now; I had never heard of Bright House. Absolutely shocking the final total of the items they were buying; washing machines and cookers I can see that people cannot wait and save up for, but most of the stuff was shiny, electrical and non-essential.

PasturesNew

The programme have now pulled together a single mother who likes to find bargains - and an advertising executive on a good salary, with a mortgage mostly paid off.

Set them both a target to buy three specific goods and get a £500 over 12 months cash loan.

Purpose: to compare the rates/cost to each of them, to prove that it costs more to be poor.

I've always found it's not just the cost of things when you're poor, it's the time cost to track down and compare all the prices just to ensure you've got the cheapest price. It takes aaages to be poor.

Crash_Over

There a company called QuickQuid advertising small loans on daytime TV. (Yes I'm sad enough to watch daytime telly )

APR was 2356%. Had to look closely cos I thought there must be a decimal point somewhere, but there wasn't.

Unbelievable. Not sure who to blame, those offering the loans or those who can't manage their finances without them.

nearlynew

Crash_Over wrote: »

There a company called QuickQuid advertising small loans on daytime TV. (Yes I'm sad enough to watch daytime telly )

APR was 2356%. Had to look closely cos I thought there must be a decimal point somewhere, but there wasn't.

Unbelievable. Not sure who to blame, those offering the loans or those who can't manage their finances without them.

Am I right in thinking that if I lent you £10 today on condition you pay me back £11 tomorrow, that would be an APR of about 4000% ?

kalaika

I watched the programme and agree that Brighthouse's sales tactics were dispicable. However, part of me does think that they offer an important service, i.e. offering credit for those that the banks won't touch to assist in purchasing needed goods like cookers, etc (not Playstations and other luxury items) and I wonder what would happen if legislation to cap interest rates were introduced. Would companies like this just close their doors as the risk/reward balance (i.e. opportunity for profit) didn't favour them? If so would low income families only have the option of using loan sharks to buy their cooker (which would be even worse)?

It also did occur to me that whilst APRs should always be used when comparing standard loans/credit, the use of APRs appears completely redundant when talking about pay day loans, etc, where the terms cover a period of much less than one year.
For example (taken from the QuidQuick website) Borrowing £50 for 30 days would result in a repayment of £64.75, which is an intrinsic interest rate of 29.5% but equates to an Annual Interest Rate of 2,222.46% which, to me, is completely irrelevant and very misleading as the loan terms are nowhere near a year long.

lemonjelly

PasturesNew wrote: »

Brighthouse though are just like the old catalogues, but you get to see the stuff/take it away.

Catalogues always provided things for people for years on a "weekly amount" basis. Your mate would have a catalogue, choose what you want, they order it, you pay weekly through your mate.

Catalogues were used as an example in the programme.

There was actually some discussion about the lack of availability of credit, & the difficulty about buying stuff.

There was a very small discussion about budgeting, but (unfortunately) it was glossed over. In my mind this was an important part of the programme.

Thing is, catalogues and the like do provide an important service to those with a genuine need - access to goods which can be paid for in small regular payments. believe it or not, repayment meters for gas/elec is the same. & they do help people to budget - I've had friends & clients both tell me how these things have supported their development of budgeting skills.

I think a problem occurs when we try to buy too many things on credit, & have too many weekly payments.

But I also think that there are unscrupulous firms (like Bright House) who prey on people in this position, & to me that is unethical. Especially given that their staff openly (in the programme) confirm that they add on all the extras without telling the customer.

It also highlights that a great number of people in the country look at what they pay each week, not the total they have to repay.

lemonjelly

From the quick quid website:

Terms and Conditions apply. Finance charge will be between £10 and £14.75 per £50 borrowed. Typical 2356% APR. †Loan amounts are based on consumer's credit history and ability to repay loan. Not everyone may qualify for £1500 ‡QuickQuid performs traditional credit checks, while still accepting those with less-than-perfect credit. QuickQuid verifies applicant information via various national databases. §Funds will be deposited the same working day, if approved by 14:30. ¶Approval may take up to 30 minutes in most cases. Payday advances should be used for short-term financial needs only, not as a long-term financial solution. Customers with credit difficulties should seek credit counselling.

FWIW their rates have come down. 1-2 years ago the same website page had typical rates of in excess of 9000%. :eek: I kid you not. I still have the agreements somewhere.