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Beware Of Weekly Payment Stores

Beware Of Weekly Payment Stores
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Weekly payment stores allow customers to ‘rent’ expensive products with a view to purchasing them towards the end of the agreement. At first glance, this looks like a great deal. You get an item that you may not otherwise be able to afford and you get to keep the product once you’ve paid it off.

However, as usual, if something looks too good to be true then it probably is. Like all other businesses, weekly pay stores are out to make a profit. And they do this in a number of ways.

Is it really ‘affordable’?

Many of these companies offer low weekly payments to entice customers to think buying a new washing machine or state-of-the-art television, for example, is actually affordable to them. However, by paying relatively small weekly amounts, customers will be left paying what they owe for a longer period of time. This really bumps up the amount of interest incurred, this means you’ll be paying a lot more in the long run.

Check the price

Despite charging a significant amount of interest – often up to 70% – pay weekly stores are renowned for their hugely inflated base prices. If you compare the price tag in one of these stores to other shops offering the same product, you might be surprised at how much the hire-purchase store is charging. Even if you pay your remaining balance early to avoid paying extra interest, you may still end up paying over the odds.

Insurance

Most hire purchase companies will require you to have rented items covered by insurance. As you don’t own the item outright, it may not be covered by your contents insurance policy. Some stores will try to persuade customers to take out the shop’s own insurance, which is usually pretty expensive. This, plus warranty service agreements can seriously bump up the cost of hiring an appliance.

Alternatives

Beware Of Weekly Payment StoresIf all this leaves you wary of using a weekly pay store, there are other ways to purchase big items. Credit cards can be useful for large purchases and most offer 0% interest for a certain period. After that you can transfer your balance to another 0% interest card if you still have something left to pay. Catalogues often offer a buy now pay later scheme, you can have the item delivered and pay for it in instalments. You will have to pay interest but this will typically be at a much lower rate than a pay weekly store, so you’ll save cash in the long run.

Credit ratings

Pay weekly stores have a reputation for accepting customers with poor credit ratings. However, in recent years companies have started putting potential buyers through the same scrutiny as banks and credit card companies. If you are accepted by a pay weekly firm but don’t think you’d get credit elsewhere, be sure to shop around and check. You may well find a credit card company ready to accept you, offering a much better interest rate and the opportunity to purchase a product at a much cheaper price while paying way less interest.

LenderLoan Amount
over 60 months
Representative APR%Cost 
£5,00015.9% APR £121.32 per monthApply
£5,00048.5% APR £222.76 per monthApply
£5,0006.9% APR £98.28 per monthApply
£300 over 65 days574.86% APR£136.51 per monthApply

 

 

 

 

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About Maria Brett

About Maria Brett

Maria is a freelance writer with over 10 years' experience producing content for a variety of publications and websites. When not working or looking after her two gorgeous sons, she can usually be found playing flugelhorn in a brass band, helping out at her local hospital radio station, shouting at the television while watching Formula 1, at the cinema or plonked on the couch with a cold glass of wine.

Website: Maria Brett

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