Dad-of-four felt he had to pay BrightHouse over rent – and blames debts for his depression
A DAD-of-four blames his depression on his spiralling debts, after racking up thousands of pounds worth of rent-to-own agreements and loans from doorstep lenders.
Jason Green, 48, from Billingham, Stockton-on-Tees, was able to take out 19 agreements with BrightHouse even though he was self-employed and struggled to pay back the weekly payments which were made unbearable by sky-high interest rates.
Today, the Financial Conduct Authority (FCA) announced plans to cap sky-high interest rates on rent-to-own products, thanks to The Sun's Stop the Credit Rip-Off campaign.
This will help the estimated 1.4million low-income families who rely on high-cost credit such as rent-to-own agreements, payday and doorstep loans to get by each year.
Politicians from across the spectrum have congratulated The Sun on the success of our "excellent campaign", and credited this website for helping to persuade finance bosses to crackdown on the sky-high interest rates.
The FCA said that it was now time to "intervene" and help the 400,000 rent-to-own customers like Jason.
Why we want to Stop The Credit Rip-Off
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
In a major victory for our campaign, the Financial Conduct Authority is now consulting on the bringing in the rule - which could be brought in as soon as April 2019.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium – up to 7 million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest – more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
- Cap on all repayable costs at double the item list prices (including fees, add-ons and interest)
- Ban on incentives for all sales staff
- Ban on discounts for existing customers to tempt them into more credit
- Companies to publish example interest rates and costs on all payment options
Doorstep lending
- Cap at double the original amount borrowed
- Stricter affordability checks
- Ban on discounts for existing customers to tempt them into more credit
At one point, he owed BrightHouse £120 a week but sometimes he was only making £100 a week when his work as an self-employed IT consultant was slow.
It was during these times that he felt like he was forced to choose between paying his rent and meeting the firm’s repayments.
In order to make them Jason ended up taking out a doorstep loan - another form of high-cost credit where the APR can reach 1,559 per cent.
"I used to make my payments in store every Friday,” Jason told the Sun Online. "I dreaded the end of the week and I’d wake up in the morning and I couldn’t get up.
"I knew that payment day was coming and I knew I needed to find the money but I just couldn’t do it."
Between 2012 and 2015, Jason took out 19 agreements, including for a phone, laptop, bed frame and tablet.
He stumbled across BrightHouse on his local high street and was tempted to take out the loans after finding out it accepted customers with bad credit scores.
His first agreement was for a TV back in 2012, to replace his broken one. He’d already been rejected for store cards.
At the time Jason, a self-employed IT consultant, was earning between £300 and £400 a week.
He was living with his wife Trudy, and his two sons and her two children, both from previous marriages.
Although he doesn’t know exactly how much money he owed the firm in total, he says he ended up paying back thousands of pounds.
He said: "At first it was great because I’d never been able to get credit from anywhere because I had a black mark on my credit score and being self-employed makes it more difficult to get credit anyway.
STOP THE CREDIT RIP OFF
"The business was going well and I had the money so the high interest wasn’t a problem. I got carried away.
"But when business was bad, it got really bad for me. I ended up taking out doorstep loans to help cover the repayments.
"It put a strain on my family and my wife, who’s a nurse, had to work every extra shift she could to pay the bills.
"We’d have around £1,500 to live on a month which would just about cover all of our bills, before we even thought about the £480 BrightHouse payment.
"Some months, we had nothing left to live on after the bills and everything was paid."
All of the agreements were taken out over three years and they all overlapped with each other.
Five cheaper alternatives to high-cost credit
IF you're sure you can afford a loan, then the interest rates you’ll see below are even lower than the cap we're calling for of double the original item price or loan amount.
Remember, before applying for a loan, borrowing money and failing to keep up with repayments can have a big and long-lasting effect on your finances.
- Fair For You - A not-for-profit ‘community interest company’ that's owned by a charity. The representative APR is 42.6%. So for a loan of £500 over a year, with weekly payments of £11.48, the total interest is £96.82. This is actually only 36 per cent of the original amount borrowed.
- Fair Finance - This firm offers personal loans of up to £1,000 repayable over six to 18 months. Borrow £500 over 12 months and you’d pay £13.88 a week, a 5 per cent admin fee of £25 and the total cost of the loan is £247. That’s 49.4 per cent of the amount borrowed - although the APR is 135.8 per cent, which may make it sound more expensive.
- Scotcash - This firm offers personal loans of between £50 and £1,000 repayable over up to a year. The representative APR is 121.5 per cent, with a 6 per cent admin fee that is payable when your loan is approved. On a £500 loan repaid over 12 months you would pay an admin fee of £30, make weekly repayments of £12.99 and pay £175.28 in interest. So the total cost of borrowing is £205.28.
- Five Lamps - If you borrowed £500 over a year you would pay £13.11 a week and a 5 per cent admin fee of £25 (deducted from the loan amount). In total you’d pay £206.72 in interest on your loan. This is 41 per cent of the original sum borrowed.
- Moneyline - On a 12-month loan of £500, you’d make 52 payments of £14.79, as well as pay a fee of £25. In total, you’d repay £794.08, so the cost to borrow £500 is £269.08. Although the representative APR is 180.62 per cent, the actual cost is just under 54 per of the amount borrowed.
Jason’s mental health deteriorated and his business suffered because of it. He was eventually diagnosed with depression, which he puts down to his debt troubles, and put on antidepressants.
Almost a quarter of people who are admitted to hospital every year with mental illness - some 23,000 - are struggling with financial problems, according to mental health charity Mind and the Money and Mental Health Policy Institute.
Separate research by Citizens Advice found that some lenders prey on vulnerable clients with mental health problems who are "not in a good position to make financial decisions".
Then one week in 2015, he was left short of cash after a client failed to pay him on time.
He told BrightHouse that he wouldn’t be able to make the payment, but promised to pay double the following week.
He claims that two members of staff from the store turned up on his doorstep, demanded the money and said they would take the items away if he didn’t hand over the cash.
He’d had enough of the stress of owing money to the firm, so he handed over every item he’d borrowed from the rent-to-own firm.
"I went and got everything I’d taken out with them and I gave it all back. Everything.
"My house was empty - I’d even taken my bed out on an agreement with them but I’d had enough.
"I didn’t even feel upset or sad about having to hand it back even after I’d been paying for it because it was making me feel so horrible.
"I can’t describe how it made me feel when it was gone. It was such a relief.
"And I managed to replace most of it through time with things from the secondhand store."
Jason now borrows money when he absolutely needs to much more affordably through charity owned Fair for You.
Angela Clements, chief executive of Fair for You, says Jason is typical of the people its helps.
"They get a nice surprise at how affordable our loans are when they talk to us – we don’t make profits," she said.
A spokesperson from BrigthHouse said: "Each BrightHouse agreement is uniquely flexible and we have a range of ways to help customers if they tell us that their circumstances have changed.
"These include rewriting the agreement, payment holidays, a payment plan, or an alternative product.
HOW TO GET HELP WITH DEBT
"Ultimately, we’re happy to accept the return of the product at any time and in any condition, leaving the customer with no debt and avoiding a default on their credit file."
BrightHouse was ordered to repay 249,000 customers £14.8MILLION at the end of last year after the financial watchdog found that it treated customers unfairly.
Some customers had loans written off, while others were handed back cash due to the investigation.
We're calling on you to help pressure the financial regulator into putting a cap on the total amount repayable to doorstep lenders and for rent-to-own goods such as tellies and washing machines. Sign our petition here.
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