A new not-for-profit challenger is throwing down the gauntlet to the rent-to-own market, promising low-income households hundreds of pounds of savings on loans for emergency purchases like washing machines and fridge freezers.
Fair for You aims to provide transparent and affordable credit for essential household items to families who do not have access to mainstream finance.
Established in 2015, Fair for You has carried out extensive market research among lower income households to develop affordable, flexible and responsible credit to meet their needs. Importantly, loans can be repaid early, with no penalty; customers are encouraged to overpay, which many do; and there are no added fees for missed payments. If Fair for You’s credit checks show affordability is an issue, applicants are encouraged to seek debt advice.
All loans are to buy essential items through an online high street that Fair for You is developing, starting with white goods provided through a partner manufacturer. Goods are delivered for free, with old items removed and low cost for installation, again meeting the needs identified in the development phase in family households with income below £25,000. Loans average around £300, are delivered online and customers can access telephone support seven days a week.
Fair for You is the brainchild of chief executive Angela Clements, who has extensive experience in the credit union sector.
Clements said: “It is now harder than ever for lower income working family households to access affordable credit when hit by a relatively minor emergency such as a broken essential household item.
“So many households would struggle to access £300 of savings to overcome an emergency purchase, even though they have a high propensity to repay a loan. What they need is access to credit quickly to keep their homes running, their children in clean clothes, and eating hot meals.
“This means that the only credit available to them is from high impact, high cost lenders that trap them into paying a disproportionate cost for credit for longer than necessary.”
She added: “We’ve listened to what people want and have built the service around what they told us. We understand the need for quality and reliable items, with credit that is flexible and supportive. We know people are paying higher energy costs on second hand items, and really want and need reliable essential items – so that’s what we offer.
“Initial response from customers has been fantastic, beyond what we ever imagined, with many of them already recommending us to family and friends.”
Fair for You’s launch follows recent news that unsecured borrowing is rising at its fastest pace since 2006 with ONS figures showing that 14 per cent of low-income households state that debt is a heavy burden.
Independent analysis showed that buying a new Hotpoint 60cm fridge freezer from Fair for You, rather than the alternative high street provider, could result in a total cost saving of £742.35 (based on the total cost for credit).
Niall Cooper, director of Church Action on Poverty, which conducted the research, said: “This price comparison demonstrates the huge savings that customers can make. Paying the same weekly amount, they can buy a fridge freezer in 69 weeks with Fair for You, whereas they would have to carry on paying for another 87 weeks to buy the same item from Brighthouse.”
Fair for You has a number of funding partners, including Esmee Fairbairn, the Joseph Rowntree Foundation and the Funding Network. It wholly owns Fair for You Enterprise CIC (Community Interest Partnership), a not-for-profit organisation with community benefit at its heart which received full authorisation from the Financial Conduct Authority in November 2015.
For more information about Fair for You go to:
Registered charity website: http://www.fairforyou.org.uk/
Trading entity website: https://www.fairforyou.co.uk/