Weekly payment store debt

Why should I think twice about buying from a ‘pay weekly’ store?

They can cost you more in the long term

Items from pay weekly stores often cost double the price than items bought outright, sometimes more.  The interest rates are high – often over 50% APR – and because the payments are usually spread over three years, this can add up to a lot. On top of this, the up-front price of the goods is often a lot higher than comparable items in other shops.

For example, a washing machine sold for £295 at a big-name high street retailer could end up costing you over £1,000 at a pay weekly store, once insurance and interest payments are added.

You might have to pay additional insurance

If you don't have home contents insurance, these stores may also try to sell you their own cover in case the item is damaged or stolen. This insurance can add a large cost over the length of the agreement, in addition to what you’re already paying for the item.  In many cases it costs less to pay for contents insurance that covers everything in your home, rather than just the one item.

You don’t own the items until they’re fully paid off

The type of credit agreement used by most rent-to-own is hire purchase. This means you don’t legally own the goods until you’ve made the final payment under the agreement.

If you fall behind on the payments for your goods the store can take them back from you, although in most cases they’ll need a court order before they can do this.  If they do repossess the items you won’t get back any of the payments you’ve already made.

You’re also not allowed to sell the goods or use them to take out credit with a pawnbroker until you’ve made the last payment. If you do this you may be committing a criminal offence because the goods aren’t legally yours to sell or pawn.

However you do have a legal right to hand back the goods whenever you want.  As long as you’ve paid half the money owed under the agreement and the account has not defaulted, there’ll usually be nothing further for you to pay.

You can get caught in a pay weekly loop

Agreements for payment store goods are usually over three years, so once you’ve paid the finance back you might be at a point where you need to think about replacing them. If you’re still on a low income, you may be tempted to take out more weekly pay items because you’ve become used to them. Over time, this could cost you thousands of pounds.

This temptation to can be harder to resist if you visit the store to make your payments. Often the sales staff will tempt you into getting more items you might not need. If you’re trying to budget carefully, see if the supplier will agree to payments by Direct Debit so you can avoid this.

Alternatives to pay weekly stores

If you need to buy new goods, there are alternatives to getting them from stores such as Brighthouse, Perfect Home and Buy As You View:

Charity shops and initiatives

Many charities sell furniture and white goods from bigger stores alongside the high street clothes stores you may be familiar with. The appliances they sell are often ‘nearly new’ when donated and have safety checks performed before they’re sold to you.

A quick search on Google can tell you where your nearest charity furniture shop or initiative is. Asking a volunteer at one of the high street stores might help too. The Furniture Re-Use Network operates across the UK and provides a wealth of near-new, refurbished goods for reasonable prices. As they save many items from the landfill, buying from them also means that you’re doing your part to help the environment.

Credit unions

Credit unions are known for offering reasonably priced loans at rates that you can afford. Some of them also offer great value electrical and household goods paid in weekly instalments that are much cheaper than the ones you may find on the high street.

Online auction websites and classifieds

Established websites like eBay and Gumtree are a great place to find the items you need for your home. You can set up alerts for specific goods or you can search more broadly for items to suit your needs. If you buy the goods from local sellers, they’ll sometimes drop them off at your home for a small fee if you don’t have your own transport.

Another option is the Freecycle network, which allows members to give – and get – items for free. There are also local Facebook groups where people sell or donate unwanted items. Be cautious when dealing with Facebook groups however, as they can sometimes be the target of online scammers. Read through the group history to check other people’s experiences and never pay for the goods by bank transfer. Cash in hand when picking up the item in person (or when it’s delivered) may be the safest option.

Local welfare provision

Your local council may provide you with essential household items like cookers or beds if you’re in financial difficulty. This is only for people experiencing an emergency so make sure to make your financial situation clear. In some cases, they can provide you with a budgeting loan to purchase essential household goods, but access to this funding is limited.

The Children’s Society has a map with information about local welfare schemes across the UK. So wherever you live, you should be able to find support.