Homebuy Direct - On Watchdog

[Guest Guy_Montag]

I don't normally watch watchdog, but there was nothing better on.

Homebuy Direct, lend money to poor people at 40+% apr. to buy horribly overpriced luxury goods from their catalogue then, oh & this is beautiful, they put a coin meter on their TV!

[binbag]

and the problem with this is what exactly?

[HPCheese]

PS2 + 2 games @ HomeBuyDirect = £308.88

PS2 @ Argos = £99.99 + 2 games = ~£180

Edited October 25, 2005 by HPCheese

[binbag]

Yup, and yet still in business. Boxclever (ex radio rentals) used to have a similar business called telebank (they may still have it, it was a small compared to the Boxclever operation which came out of receivership in Jan 2005)

The way it worked was that if you were turned down for a TV rental then you were offered one of these TV meters, through which you could pay the rental and also buy overproced goods. Homebuy run the same model.

The reason it works is that the target customer has practically no access to mainstream credit (although the growth of the "sub-prime" loan market has extended that somewhat). The meter becomes the piggy bank for the house. The box is emptied by an agent who comes round regularly and the agent is basically the reason it works (or worked) and s/he builds up a strong relationship with the customer. The only other credit access is usually the informal loan market, where the APRs are quite a bit higher.

All part of the gearing up of the UK. But before you knock it as a rip off, people were using this system and thinking it was the best availbale option. Takes all sorts doesn't it?

[munimula]

I don't normally watch watchdog, but there was nothing better on.

Homebuy Direct, lend money to poor people at 40+% apr. to buy horribly overpriced luxury goods from their catalogue then, oh & this is beautiful, they put a coin meter on their TV!

The people were complaining that the true APR was around 40% when they believed the rate would be the advertised 'typical example APR 29.9%'

Most of them believed they were taking on these products at around 30% APR which is still ridiculous.

Most of them didn't even check the APR before signing and frankly are too stupid to know what it means anyway.

Edited October 25, 2005 by munimula

[spline]

So let’s take a product at random, say their Daewoo Freeview box. This costs £1.00 a week for 156 weeks, including the MV+ maintenance vouchers, or £156 total. Compare this to Amazon selling the same box for £39.99.

Even without the vouchers, at 73p a week, this looks like a simple interest rate of 1.8% per week for 3 years, or an equivalent compound interest of 1.75% pw or 146% pa. Yet they claim a 29.9% typical APR – this is only achievable of they inflate the price/loan by about 2x at the beginning, i.e. the buy now price at £79.43. Total repaid over 3 years is 4x the £39.99.

Edit: notice that the annual intererest rate based on the market value of the product is around one hundred and forty six percent!

Edited October 25, 2005 by spline

[Guest Guy_Montag]

The people were complaining that the true APR was around 40% when they believed the rate would be the advertised 'typical example APR 29.9%'

Most of them believed they were taking on these products at around 30% APR which is still ridiculous.

Most of them didn't even check the APR before signing and frankly are too stupid to know what it means anyway.

I thought it was funny that they said they thought the APR was going to be 30% not 40%, when they obviously had no idea what it meant.

Incidently do people in this position not have access to credit unions?

[right_freds_dead]

the kind of people that will need this service are the kind of people that couldnt save for goods. this is one of the only ways they can access the goods. its expensive, but its the last option for many.

not really the types to save £299 and get the best price.

some people have things so tight they have to rent washing machines, tvs and videos.

cash coverters and this company are geared for the poverty stricken.

[Guest Bart of Darkness]

the kind of people that will need this service are the kind of people that couldnt save for goods. this is one of the only ways they can access the goods. its expensive, but its the last option for many.

My mate is like this. Has no idea about saving and is always in debt. He has a coin-op TV and seems happy enough.

With the falling prices of CRTs he could probably get a good deal on a new 32in screen but things are so tight that he couldn't afford it.

[right_freds_dead]

My mate is like this. Has no idea about saving and is always in debt. He has a coin-op TV and seems happy enough.

With the falling prices of CRTs he could probably get a good deal on a new 32in screen but things are so tight that he couldn't afford it.

seems daft and not financially a good idea, but i think theres a larger proportion of buyers like these out there than people might realise.

i know several who do this. they tend to have a bunch of court judgements, drink lots, smoke lots and claim lots of benefits. but if on benefits a coin op saving box can be a lifeline, especially at christmas time. its a distorted version of high credit for bad payers.

i dont disagree with it, though the rates are hefty, the hassle of getting the payments of every client will be high.

[erd]

the kind of people that will need this service are the kind of people that couldnt save for goods. this is one of the only ways they can access the goods. its expensive, but its the last option for many.

Never understood this, I had a friend on benefits who wanted a freeview box (so they could watch big brother all day - say no more!)

The options were:

1) save £2 for 20 weeks and buy at argos (cost £40 but wait 20 weeks to get it).

2) pay £2 a week to a mail order catalogue for 40 weeks (cost £80 but get it now).

To me option 1 is the best option, especially when you have very little money, but they had to go for option 2. It seems that even those with very little money, have a 'I want it now' attitude and they can least afford it.

[Guest growl]

I am one of those people around sixteen years ago who had one of those meter telly's and yes times were hard and it was after the last crash then reccession. It was in wolverhampton, in a tiny little bedsit, shared bathroom facilities, also had a meter for the lecy. I was not on benifits, worked as a dinner lady in a public school on the penn rd. I had moved down there from Oldham to find work after being in doubleglazing sales. Two year later I was back in Oldham living on the streets.

My, how things have changed. Of course I've since owned several properties and now live in the south with a nice lifestyle. But I know that there are still people I used to know that still live like that. My missfortune and experience of rip-off companies, landlords and basically everyone who prey on the poor made me dig myself out of poverty. But there are many who don't have the ambition to do that. They don't have the patience to save the pound coins and wait a few months for a better deal. They are very short sighted. they don't fear the future, they live for the moment. I also think this is because there has been no previous example of how to get the best out of life.

I think I was able to change my circumstances because before I fell on hard times I had a reasonably good life, and was educated well enough to understand basic economics, and about patience and saving. So I knew what I was missing when I lost it.

But many people who live hand to mouth have been doing it for generations. So there has been no example, either from family or freinds or neighbours.

Its sad but I think our benefit system is partly to blame.