Cash conversion
Cash Converters and
similar businesses offer a facility whereby the customer sells goods to them,
and they undertake not to sell them to anyone else over the next 3 months,
during which time the customer can buy them back at a higher price. This is not
pawnbroking, but they will be selling second-hand goods, which will have to
satisfy all appropriate safety legislation.
A
report "Would You Credit IT?", by two researchers at Liverpool John
Moores University and published in January 2005, says that the effective cost of
the borrowing in these deals can be 1000% APR or more. One example quoted is of
a Sussex man who borrowed £150 at a buy-back store on the security of his £500
stereo. He had to pay an additional £42 to retrieve it within 28 days,
equivalent to an APR of 1834%.
The report's conclusions were that better financial education needed to be
provided for those on low incomes.
(c) Bob Imrie
This page updated 02 February 2005