Price cap proposed for rent-to-own firms to protect vulnerable consumers - MSE News

Former_MSE_Naomi

The financial regulator has proposed a new price cap on rent-to-own firms to come into place next spring, meaning consumers can't be charged more in interest than they paid for the product...

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'Price cap proposed for rent-to-own firms to protect vulnerable consumers'

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forgotmyname

Wont they just increase the price of the item?

So your £200 washing machine and £300 interest will be a £300 washing machine and £300 interest?

boo_star

forgotmyname wrote: »

Wont they just increase the price of the item?

So your £200 washing machine and £300 interest will be a £300 washing machine and £300 interest?

From the article

Rent-to-own firms will need to benchmark their prices against other retailers. To combat high base prices, rent-to-own firms would need to calculate the median price of the same product at three other 'mainstream retailers' (including no more than one catalogue credit retailer) and make sure they were not charging more.

forgotmyname

Quite often there are plenty of places selling the same machines with quite a large price gap.

Bought my hob from AO for £220, plenty of stores selling it for £50-70 more.

A step in the right direction but is it enough?

One-Eye

So is the advice to "vulnerable" consumers thinking of rent-to-own to borrow the cash from a payday lender where the interest is capped, and then buy the item from one of those retailers selling it at a much lower price?

Nasqueron

One-Eye wrote: »

So is the advice to "vulnerable" consumers thinking of rent-to-own to borrow the cash from a payday lender where the interest is capped, and then buy the item from one of those retailers selling it at a much lower price?

Advice should be - if you can't afford it, don't have it, not pay 3x as much as it's worth. Good luck with that though!

CKhalvashi

Nasqueron wrote: »

Advice should be - if you can't afford it, don't have it, not pay 3x as much as it's worth. Good luck with that though!

The problem is mentality to an extent.

My fridge went back in the days I was at uni, I went and bought a second hand one for about 15% of the price of a new one.

Some just won’t do that for some reason, even though a used product given a good clean before being put back into action was the best solution at the time.

henrik1971

Agreed. Its all about mindset.


When we were really stuck for money through the 1990's and needed domestic appliances, we looked in the free ads - cards in newsagents windows, etc. Bought most things that way. Still today, 25 years later, as I look around the house, most of the furniture and some of the appliances have come second-hand from ebay.


Buying new just hasn't been an option for most of our adult lives. Only now in our late 40s are we able to do so - but even then quite selectively.



Can't believe its taken so long for this price cap to come in.

System

When you look at what the caps are you're still going to be spending 5 times what the retail price in say Currys is in the end.

Looking at the chart below from the BBC I'm sure you'll agree you can go into a store and buy them for 1/5th of the total price you'll pay even with the cap. The Indesit Fridge Freezer for example is £286 from Currys.

Andrew1974

This seems really good. My Ma & Da had no option but to deal with the Provvy. They were terrible. What I note is that Provident Financial donated large sums to the Conservative Government.

I want Provident brought to its Knees.

dealer_wins

It will result in tighter acceptance criteria, excluding more of the poorer credit applicants!