Credit expert warns on O2's 'Easy Pay'

dahamsta · 14-12-2002 04:25PM #1

ENN

A consumer credit expert has urged caution on O2's new 'Easy Pay' program, which provides high-interest loans to consumers who are buying high-end mobile phones.

Under the "Easy Pay" plan, customers who wish to buy either a Nokia 7650 camera phone or an O2 XDA can pay for the item over 12 months, without any up-front deposit.

GE Capital, O2's partner in the new service, charges an APR (annual percentage rate) of 22.9 percent on phone purchases through the scheme -- a hefty premium on the interest charged on bank loans and significantly higher than the amounts charged by credit card companies. Banks and credit unions are currently offering term loans at around 12 percent, slightly more than half the rate offered by O2 and GE Capital. Even credit card companies provide credit for between 14 and 17 percent APR.

According to Liam Edwards of the Money Advice Bureau Service (MABS), the 22.9 percent rate is the maximum amount that can be charged on a loan without the lender having to apply to the Director of Consumer Affairs for a moneylender's licence. MABS is a government supported money advice and budgeting service.

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leeroybrown · 14-12-2002 04:32PM

Interesting business strategy.

I'm sure they'll trap some unsuspecting fools too. (They might even get some people to buy the camera phones)

Next thing you know they'll be offering second mortages for users to pay for all the picture messages

eth0_ · 14-12-2002 04:38PM

AND? Dixons/pc world charge around the same interest rate. People use GE Capital because you don't have to go through the palaver of providing 6 months bank statements etc etc etc to get a loan off them, and it takes 2 hours to get a reply.

Having said that, I decided to get a shiny new phone through that Easy Pay thing, and I was turned down! I have a perfect credit rating and have never defaulted on any loans, and to make matters worse, the bastards never even RAN a credit check on me (which I found out when I requested a copy of my credit rating).

When the loan taken out is so small (as low as 200 euro), the interest rate is hardly noticable really.

Credit expert warns on O2's 'Easy Pay'

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