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How do you fancy paying back your debts by watching television?

Thursday, 11th November 2010

Well around 100,000 people do just that through a firm known as Buy-As-You-View (BAYV) which has its head office based in South Wales.  Established in 1972 it now employs 750 staff, it does no high profile advertising relying on business being generated by word of mouth and yet is largely unknown outside the mainly deprived communities it operates in.

The slot machine on the television

“Pay-as-you-view" borrowing is where customers repay their debt for loans to purchase household consumer goods, such as televisions, furniture or washing machines, by putting coins into a meter installed by the loan company, which is connected to a borrower's television. This method then dictates how much viewing time the customer receives and to stop it being switched off regular deposits of coins have to be fed into the meter.

BAYV has recently attracted attention from anti-poverty campaigners because of concerns about its tactics as it lends money to its customers making them pay back through their television sets and if they don’t pay then the television gets switched off and action follow to recover the goods.

It is claimed that these expensive meter-based loans, which charge average APRs close to 40%, are targeted directly at low-income groups - those that are more desperate and vulnerable.  These people have little or no access to cheaper high street credit and debt campaigners are calling for this type of lending to be more closely scrutinised by regulators.

Insurance fees and service agreements

This method of ‘borrowing’ is not widespread and is limited to less well of areas of the community. Whilst  anti-poverty campaigners accept that these lenders are preferable to alternatives such as loan sharks, who operate outside of the regulatory system and have a reputation for intimidation, there are concerns that once interest, insurance fees and service agreements are added, some borrowers can find themselves paying almost three-and-a-half times the high-street cash price of goods they have obtained.

The catalogue

There are currently 290 items available to purchase, either through the Company’s catalogue or on-line, ranging from mobile phones, bedroom furniture and baby equipment to mobility scooters.

I looked at a, Sharp LC32LE600E television they had for sale offered at a cash price of £699.

The repayment plan is over156 weeks at £5.50 per week which adds up to £1,170. If the customer took their ‘All Sorted’ maintenance policy then the total repayable for this television climbs to £1,521.

I could buy the same television today via the internet for £388. Okay no maintenance policy but I still have a guarantee and consumer rights and more importantly make a saving of £1,133.

Is it legal?

The business model of lenders such as BAYV is entirely legal and subject to statutory regulation and the company says it is committed to offering customers value for money and to being clear and upfront about all costs.

It emphasises that it does not do door-to-door sales, just debt collection from meters and says collecting payments directly from homes means that many customers save money by not having to travel to a retailer to make their payments. It stated that a quarter of its new business comes from customer referrals, which was evidence of satisfaction with its products.

The alternative lender

Many will argue that those on low incomes would be better off going to a credit union as they offer cheaper interest rates ranging from 12 to 24 % which enables the borrower to make cash purchases at far more competitive prices.

Credit unions are not that widely advertised so perhaps more needs to be done to highlight their existence and promote the help they offer to those more vulnerable in our society thus preventing them from having to pay a very high price for credit. More information on Credit Unions and how to find one at DebtWizard guide to Credit Unions.

The high street banks could also do more to help these people by making smaller sums of credit available instead of the minimum £3,000 or so upwards, an amount which low earners cannot service.




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