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

You could pay twice the sale price, or even more, by paying this way.

Why is this?

You will have to pay high 'interest' - as much as 50 per cent. Interest is the amount you are charged for borrowing money. It is on top of the sale price and you have to pay it until you have repaid what you owe.

In many cases, the longer you take to pay in full, the more interest you will have to pay.

And the price of the goods is often a lot higher than in other shops. A high street shop may sell a washing machine for £300. But a weekly payment store may sell it at £400.

Look for the 'annual percentage rate' (APR) to work out how much you will really spend by paying weekly.

You might have to pay additional insurance

These stores may try to sell you their own cover. In many cases, it costs less to pay for contents insurance for everything in your home, rather than the one item.

You do not own the items until they are fully paid off

Until you make the final payment, the item you have bought does not belong to you. It still belongs to the seller until this time.

This means if you fail to pay, you could lose the item. The store could take it off you.

They might need to get a court order to do this.

You do not get any money back from the payments you have made when a store takes their goods back from you.

Because you do not own the item by law until it has been paid for in full, you cannot:

• Use it to take out credit with a pawnbroker
• Sell it

But you do have a legal right to hand back the goods when you want.  As long as:

• You have paid half the money owed
• The account has not defaulted

Then there should be nothing more for you to pay.

You can get caught in a pay weekly loop

Agreements for payment store goods tend to be over three years. Once you have paid it back you might be at a point where you already need to think about replacing it.

If you are on a low income, you may be tempted to buy the replacement by paying weekly again. Over time, this could cost you a lot of money.

This can be even harder to resist if you go into the store to make your payments. Often the sales staff will tempt you into getting more items you might not need.

See if the supplier will agree to you paying 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.

The appliances they sell:

• Are often ‘nearly new’ when donated
• Have safety checks performed before they are sold to you

The Furniture Re-Use Network operates across the UK and provides lots of near-new, refurbished goods for reasonable prices.

Credit unions

Credit unions are known for offering reasonably priced loans at rates that you can afford.

Some of them offer great value electrical and household goods that:

• You can pay in weekly instalments
• Are much cheaper than the ones you may find on the high street

Online auction websites and classifieds

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
• You can search more broadly for items to suit your needs
• If you buy from local sellers, they may drop them off at your home for a small fee

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 careful as these groups can be the target of online scammers:

• Read through the group history to check other people’s experiences
• 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.

• This is only for people in an emergency. So make sure you are clear about your situation
• 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.