Fair Finance to buy domestic appliances
Fair for You
A 2013 DEMOS report stated that more than a third of households in the UK had to rely on credit when hit by a one-off or unexpected expenditure such as a broken fridge or washing machine. It is estimated that a similar number are officially ‘low-paid’, existing on a total household income of less than £20k.
Many of these are excluded from mainstream finance and forced instead to rely on the high-cost credit sector, itself worth in the UK an estimated £6bn.
The options here for customers include so-called payday, or doorstep, lenders, offering small amounts on very high interest rates, sometimes requiring family members as guarantors, but always with a heavy hand in the case of default.
There is even one growing lender who takes repayment through a meter attached to the customer’s TV – no money going in, no TV!
One of the sectors having the biggest impact is the rapidly growing Rent to Own (RTO) sector, or weekly payment stores, often found on the high street in poorer parts of town. There are considered many issues with this sector. These are; lack of transparency, high fees, overcharging, compulsory insurances, repossessions, incentivised sales staff - and few alternatives.
Because they offer credit the customer could not access elsewhere, prices are top-loaded. A basic Hotpoint fridge is currently on offer* through one RTO provider with a list price of £457, totalling £786 after three years’ repayment; exactly the same model is available via John Lewis for £168, including a two year guarantee.
Fair For You (FFY) offers a new ethical and affordable alternative for those essential household goods. Quality items are bought direct from the retailer via their website at regular high street prices, with a loan provided by, and repayable to, FFY.
In contrast with other lenders, the customer chooses from terms that are flexible and affordable, and decisions on applications are made immediately - based not simply on credit scores but on financial behaviour and propensity to repay. These customers could be called ‘managing mothers’, bringing up young children and often hampered by irregular work patters, zero-hours contracts, and lack of savings to fall back on; yet managing to keep out of serious debt, preferring to live on toast every day than miss a loan payment, while keeping their families healthy and happy.
The team behind FFY has vast experience in delivering affordable credit at community level, and the launch of the charity follows a year’s consumer research with focus groups across the country. The customer really is at the centre of everything at FFY, and the lending model and range of products have been developed to meet genuine needs.
Essentially, FFY believes that within five years it can see each customer saving £1,000 per item they buy compared with high cost credit; if it manages to work with just 5% of the market currently served by the leading RTO company, this will see 260,000 families on the path towards better financial stability.
*Details checked 17 October 2015