Actually no, not if it’s £2 a day for 3 years. That’s over £2000. Yet this is the type of figure Homebuy, a doorstep lender which secures borrowing based on a coin-operated TV, charges. There was a story on it on Watchdog tonight. I was meant to be going in to do an interview after the programme, yet sadly they were tight for time and cut the story down (all because of a story about a ‘Swinging’ hotel in Cancun last week that it wanted to give more time to).
Anyway I was mulling what I was going to say. There were some interesting case studies. Buy a 28 inch widescreen TV for £700, plus £300 in maintenance (warranty type thing) then interest of 40% apr on top and you’re getting on for a couple of grand. Now this of course is a horrible sum, yet there is a need to question why people do this in the first place. These loans are targeted at the unemployed and those with ultra low incomes.
Yet why borrow? OK, a TV is a necessity as are the fridge freezers, cookers and other white goods. Yet why a top of the range one?. People are paying £14 a week for the widescreen TV.
I accept the people using Homebuy cannot get credit elsewhere, but lets do the maths. There’s currently a 28 inch widescreen TV in Sainsbury for £160. Rather than 3 years of debt for the TV, using the same amount of money you could buy it in 3 months. I fail to understand how you stop this type of situation. Legistlation won’t stop it – at least these people are legally expensive and charging 40% not 4000%. When will we learn to educate people about debt and how to do it? Why does our legislation continually concentrate on curing the symptons of debt crisis and not the cause – hideous financial illiteracy?