May 2, 2019 8:37 am Written by

There is a New Appliance Rental Scheme Being Tested

If you have bad credit and need a loan or want to buy something “on time” or HP, your options can be limited; but you do have options. There are bad credit loans available.

Guarantor loans, payday loans, and even rent-to-own for some appliances are all options.

However, depending on how much money you need to borrow, for how long you need to borrow it, and what the loan is for, options such as payday loans and even RTO, rent-to-own, may not be the better option.

Payday loans are short-term loans, and require to be repaid on your next payday, which is usually within 30 days.

Guarantor loans offer larger loan amounts and also longer periods of repayment to keep the monthly payments low.

Rent-to-own stores seem like a good option until you look at how much you are paying in the end for the item you wish to purchase.

An appliance that may cost you £300 upfront, using rent-to-own can end up costing three (3) times that amount, if not more.

Recently the FCA/Financial Conduct Authority has looked into RTO companies, and issued price caps. They also found one RTO company had not clearly listed it charges and fees, and has to “redress” their customers.

However, there is a new appliance rental scheme being tested, the scheme is offered by online appliance dealer AO, and for now is being tested with some housing associations in England and Scotland.

The appliance dealer is offering an“8kg Candy washing machine” for the rental fee of just £2 a week. This is with no upfront fees or costs, and “no-catch”.

AO states, “This includes delivery, full insurance, repairs and recycling of any old appliances without any credit checks. Customers can also cancel at any time and arrange for collection of the washing machine free of charge.

How does this differ from a standard RTO contract, the renter never owns the appliance. After the end of the contract (5 years), the company comes and takes the appliance back.

The logic being used here is that those with bad credit, no credit, and also financial issues, can afford £2 a week. And if this trial works, other appliances may be offered as well, TV’s, dryers, fridges, etc. All for a low weekly rental.

There will be no affordability or credit checks.

AO’s Founder John Roberts stated, this is “a totally different approach”, and offers flexibility to those in need of appliances.

He states, “AO owns a nationwide logistics business with trucks delivering to every UK postcode daily, one of Europe’s most advanced electricals recycling plants that produces valuable metals and plastics that are sold on for future use, and it has positive relationships with major manufacturers through AO.com.

Roberts added: “This is yet another example of what we do best – disrupting the market in the AO way.”

It’s a straightforward £2 per week payment with no upfront charges and no catches, so that customers know exactly what they are paying for their washing machine from the start.”

It’s a totally different approach to the current rental offers out there and I believe that we’re doing better.”

Our advantage is that we own most of the supply chain. This keeps our costs low, meaning we can save customers hundreds of pounds a year when it comes to renting electrical essentials.”

Of course, rental has appeal for a broad range of customers, not just those on lower incomes. It’s early days for us, but I’m optimistic about the potential.”

Obviously it will take time as to if the trials progress forward and the rental scheme grows. As to if this may pioneer a new way to rent appliances, difficult to say. AO seems to have the inventory and logistics in place to make the scheme work, it may be difficult for a new start-up company to be competitive, however, existing RTO’s may look to adjust their business model to get in on this if the demand is there.

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