We take a look at some of the lives impacted by high-cost credit and how a cap on rip-off rates and stricter affordability checks could save millions for the UK's poorest families
MILLIONS of families are stuck paying back sky-high interest rates of up to 1,557 per cent to legal loan sharks on our high streets and doorsteps.
Tomorrow, the city watchdog releases its review into high-cost credit in which it will set out measures for the industry.
Complaints about high cost credit, including rent-to-own firms and doorstep lenders, have soared to their highest-ever level this year - an increase of 40 per cent, according to new figures from the Financial Ombudsman Service.
The Sun wants the Financial Conduct Authority to put a cap on repayable costs to rent-to-own and doorstep loans so customers never have to pay back more than double the amount they borrow.
We also want stricter affordability checks, a ban on incentives for sales staff and an end to discounts to tempt customers into further debts.
Citizens Advice estimates that more than £200million could be saved if a cap was introduced.
Every year, millions of the UK's poorest people turn to high-cost credit, just like Gemma Oakes, who was a customer of a rent-to-own firm for 12 years.
In total she paid back more than £12,000 but she estimates that if she’d bought the same items on the high street she would have paid less than £5,000.
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.
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
Doorstep lending
She first turned to a rent-to-own firm when she was 24 and had just moved house in Salford and money was tight.
Gemma, now 36, said: “At the time I didn’t think about the interest rates or how long I would be paying for, I just thought about the weekly price and that it seemed affordable.”
Over the following years, Gemma also bought a TV, stereo, sofa, PlayStation 4, another fridge and two more tumble dryers.
At one point she was paying out £56 a week for her products – it was a major chunk of the weekly budget for the stay-at-home mum-of-four.
It was only last year, when her boyfriend Daniel, a bus driver, moved in and they decided to clear some of their debt, that Gemma looked at all of her old agreements.
“It was the first time I had actually looked at how much I was paying for each item – it was at least double what they would cost if I’d been able to buy the products outright.”
Gemma Oakes, rent-to-own customer
She said: “It was the first time I had actually looked at how much I was paying for each item – it was at least double what they would cost if I’d been able to buy the products outright.”
Gemma has now cleared all of her debt with the firm after her mum secured a loan to help her pay it off.
She said: “I regret using the company but at the time felt like I had no other choice.
"Some weeks I used to go without buying food so I could repay my debt.
"I'm not a customer anymore so the changes would be too late for me but I welcome anything that can be done for others. Something has to change."
SINGLE-MUM of eight Georgina Hamm was forced to choose between heating her home and paying rent-to-own firm BrightHouse due to “extortionate” late fees and mounting debts.
The 49-year-old from Leighton, North London, took out more than 10 agreements for items including TVs, games consoles and mobile phones for her children.
She claims to have paid back £20,000 but owed thousands more to the firm.
At the worst point Georgina was paying BrightHouse £85 a week which left her £45 a week to feed her children, now aged between 11 and 33.
She told The Sun: “I’d stopped paying council tax, rent and other bills but I was too scared to miss a BrightHouse payment.
“We couldn’t afford to put the gas central heating on.
MORE than 1.6million people are customers of doorstep loans, while 400,000 owe money to rent-to-own firms.
In 2014, a cap was introduced for payday loans. Since then, the number of people with unmanageable debts has more than halved.
It has not pushed customers into further financial difficulty.
It has not led to more people going to loan sharks.
Citizens Advice, which is also calling for a cap, claims it regularly see cases of customers who are struggling to keep up with doorstep loan payments.
Half of people with doorstep debt feel trapped.
Meanwhile, rent-to-own customers often continue to make payments, even if they can't afford them, because they are concerned about sending the items back.
Only 50 per cent of rent-to-own agreements are ever paid off. This means THOUSANDS of people are paying out for goods that they never manage to own.
Citizens Advice estimates that a cap could save doorstep loan customers £123million a year, while rent-to-own customers could save up to £62 million a year.
“They make it sound so easy, that you can buy these things for just a few pounds a week, but it’s actually very expensive.”
Georgina, who is a full-time carer for three of her children, claims she was charged £5 a day per item if her payment was late.
As she didn’t have a debit card, every Saturday she would make the 50-minute bus journey to the store in Wembley to pay in cash, sometimes bringing her younger children with her.
One Saturday she didn’t have the cash to make the payment and went in on the Monday.
She said: “They told me I owed £120 in late payment fees on top of what I needed to pay.
“I didn’t have that kind of money so I had to borrow it from a friend.
IF your rent-to-own or doorstep loan repayments are unmanageable, you may have been mis-sold credit. If it can be proven your lender acted irresponsibly, you may be due a refund. Here's what you need to do to find out where you stand.
Step one: Complain to your lender in writing
Explain why you think the loan was unaffordable and how you think the lender should put this right, such as refunding your interest and charges or writing off the outstanding balance. Websites such as can help you put the letter together.
Step two: Follow procedure
Ask for a copy of the lender’s complaints procedure so you can understand the process it follows.
Step three: Ask the Ombudsman
The lender should acknowledge your letter within five days and resolve it within eight weeks. If you’re not happy with the outcome you have six months from that point to appeal to the Financial Ombudsman. You can contact the Ombudsman
Step four: Don’t use a claims firm
A claims management company might get in touch offering to help. Say no – it won’t get you any more compensation than you could get yourself but it will either charge a fee or take a cut of any money refunded to you.
Step five: Speak to a debt adviser
If you are worried about debt, an adviser can provide information and advice and help you manage it. It’s particularly important to speak to an adviser if you’re bankrupt or in a formal debt solution such as an IVA as a refund may affect this.
Two years ago, Georgina took out a debt repayment plan known as an Individual Voluntary Agreement (IVA) to help her pay off everything that she owed, including her debts to BrightHouse.
A spokesperson from BrightHouse said: "BrightHouse provides a unique way for those on low incomes, who are often excluded from mainstream credit, to get the everyday things many of us take for granted.
“We take our customers’ circumstances very seriously and we have extremely robust policies in place to ensure that the agreement is affordable and to identify customers who might be in a vulnerable position.
"Every 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.
"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."
MUM-OF-TWO Charlene Telford from Tamworth, Staffordshire, regrets racking up thousands of pounds in doorstep loans and is now unable to get a mortgage due to her damaged credit history.
The 32-year-old first took out a doorstep loan in 2011 to help tide her over during the expensive Christmas period.
Over two years, she took out five doorstep loans worth £1,600 and now - five years later - she is stuck with a £2,583 bill she can't pay off.
She said: "I regret it so much but at the time I had no idea what interest rates meant.
"All I thought was I'll take the option for the smallest payments and take the longest time to payback but I was so wrong. I just needed the cash.
"I didn't realise until The Sun's campaign that the interest rates were so high and what that really meant."
Charlene is now unable to get a mortgage due to her poor credit score.
She added:"I know I'm silly because I took the loans out in the first place but I had no idea about finances when I left school.
"You're not taught about it - I didn't understand what interest is.
"All I hope is that by the time my daughter is old enough to take out a loan, the doorstep loans won't exist any more."
STAY-AT-HOME mum Alisha March still has sleepless nights about the £450 loan she took out five years ago.
It was to pay for a headstone for her parents who'd passed away within months of each other.
The 32-year-old from Chesterfield is still paying back the loan and owes £900 in total - double the amount originally borrowed.
She said: "At the time, my husband and I were going through a bit of a rocky patch and although we share the bills and have a joint account, I didn’t feel it was the right time to be asking him for money.
"I was grieving and my head wasn’t in the right place to think clearly either."
The £450 was handed over to Alisha in cash, without any further explanation of the eye-wateringly high interest rate.
She added: "He told me I’d be paying a ‘little bit more’ than I’d borrowed but that with my tax credits I could easily afford it. I was in a vulnerable position.
"As soon as I’d signed the paperwork I noticed his manner changed. The friendliness and charm disappeared and he was very business-like, telling me I needed to pay back £35 a week over a period of about 18 months."
"I started suffering from sleepless nights. I kept wondering if they’d send a bailiff or take me to court."
Alisha was unable to keep up with the repayments and has now negotiated paying back £5 a week.
"They’ve added some more charges to it – I’m not sure how much – for late payment and I will be paying it off for years."
HAVING large amounts of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money.
Work out your budget - by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs.
Pay off more than the minimum - If you’ve got credit card debts, aim to pay off more than the minimum amount each month to bring down your bill quicker.
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay the balance off in full each month, prioritise the most expensive card (the one with the highest interest rate).
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay.
Get free advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups such as Citizens Advice and National Debtline offer free advice and can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
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