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Brighthouse and the heavy price of paying by the week

Those who can least afford it are being charged up to twice as much to buy goods from the growing number of rent-to-buy stores such as Brighthouse
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The Guardian, Friday 23 November 2012 23.00 GMT

Brighthouse promises a ‘great deal’ on its kitchen appliances, furniture and televisions but its hundreds of thousands of customers are paying a high price
Hard-up households are paying as much as double the normal price for basic domestic goods by using high-cost credit offered by weekly payment stores.

Brighthouse promises a “great deal” on its kitchen appliances, furniture and televisions, with its cheery daytime TV adverts telling customers it makes “life a little bit easier by giving you the things you need right now”.

The retailer is expanding rapidly, with 253 stores already and plans for as many as 650 across the UK. Every year for the past six years, at a time when the rest of the high street has been savaged, Brighthouse has enjoyed double-digit profit increases.

But its hundreds of thousands of customers – typically those on benefits or low incomes, who may have had problems with loans in the past – are paying a high price.
Beko 60cm double oven in steel
Brighthouse cash price: £562.42
Interest etc over three years: £247.22
Optional service cover: £436.80
Total (with OSC): £1,246.44
Co-op: £389
Identical model? No
Brighthouse claims its goods are “competitively priced”, although when Money tested a sample of goods, we found it relatively easy to source them more cheaply elsewhere. But Brighthouse’s profits come not so much from selling the goods but from the expensive loans it offers customers and the extraordinary rates for its optional, but heavily promoted, service cover.

For example, a 60cm Beko double oven costs £562 in Brighthouse. An almost identical Beko oven sells for just £389 at the Co-op.

But Brighthouse encourages customers to pay weekly, at an interest rate of 29.9%. That takes the cost of the oven to £809.64 over three years. On top of that, Brighthouse sells its service cover for £436.80, again over three years. At the Co-op, a three-year warranty on the same oven costs just £49.99.

If you don’t have home contents insurance, Brighthouse insists that you also buy damage liability cover in case the oven is damaged or stolen. This costs £1.20 a week or £187.20 over three years.

The add-ons turn a £562.42 oven at Brighthouse into a £1,433.64 bill over three years – to be paid by some of the poorest households in Britain, hit by cuts to the social fund and starved of credit by the high street banks.
Hotpoint Ultima 9kg washing machine
Brighthouse cash price: £562.42
Interest etc over three years: £247.22
Optional service cover: £436.80
Total (with OSC): £1,246.44
Tesco price: £469
Identical model? Yes
Meanwhile, Brighthouse’s report and accounts reveal that its highest-paid director enjoyed a 23% pay rise to £809,000, plus another £32,000 for his pension. It is ultimately controlled by private equity group Vision Capital Partners, and registered in Guernsey.

Paul Crayston of charity the Money Advice Trust, which gives free financial advice to people with debt problems, says that while items in pay-weekly stores may initially appear to be affordable, it is an expensive way to shop. “Total repayments will vastly outstrip top high street prices, and you run the risk of having an item repossessed if you fail to keep up with repayments,” he warns. “The price of the ‘optional service cover’ offered by Brighthouse is concerning, especially when compared to warranty schemes offered by established retailers.”

Got the gist?……..If not read February’s Which? magazine ……tells you pretty much the same thing.