We all associate the high street banks and building societies as the place to go when it comes to loans and lending money. Often these are the first places that people turn to when they need to borrow money not realising that other options exist – one of these alternative options is the doorstep loan:
Doorstep collection loans are available throughout the UK from a variety of substantial, respected and reputable companies – some, like Provident and Shopacheck, are pretty much household names. They continue to grow in popularity with millions of these loans approved each year – but what makes them so popular and so different?
With any form of bank loan you’re going to need a pretty good financial reputation and your credit needs to be in good order if you’re going to be approved and, let’s face it, it’s been pretty difficult for anyone to maintain a perfect credit history over these last few years of global economic turmoil with the cost of living rising and job security diminishing. So all those with a bad credit history are often wasting their time knocking on the doors of a bank. With a doorstep loan credit history doesn’t matter – that’s all in the past. Sure, there’ll usually be a form of credit check but that’s normally to prove identity, personal details and address, what really counts is the ability to repay the loan moving forward. CCJs, defaults, previous credit problems need not prevent a doorstep loan approval.
With a bank loan you’re going to need a job paying a regular monthly or weekly wage directly into your account but the criteria for a doorstep loan is far more flexible meaning those working full time, part time, self employed, retired or even on benefits will be considered.
So just how do they do it and what’s the catch? There’s no catch but if you’re looking for a loans of thousands of pounds then it’s not a doorstep loan you need but if you’re looking of a smaller loan of up to £500 or sometimes £1,000 then it’s an option. The way it works and the reason the lending criteria is so open is that the loans are relatively small sums of money, repayments are split into small, weekly, affordable instalments which are collected, in person, right from your doorstep by a local agent. This, along with the pretty high interest rates, minimises the risk to the lender and opens up the ability to approve an application when other lenders may say no.
It’s all about real people – it starts with a very simple online application form but that’s where the automation ends as, following this, the applicant will be contacted by the local agent who will visit in their own home to discuss the application and the loan itself before making the decision to lend or not. The next step is for this same agent to deliver the loan to you and arrange a convenient day and time to collect the repayments. The agent will then call each week, at the agreed time, to collect the repayments, often in cash.
What results is a relationship with the agent – a trust that he or she understands your situation and can provide advice you can trust in. The main doorstep lenders will pay their agents a commission based on repayments collected and not how much money they can lend and that provides the confidence that they’re not going to push you into additional borrowing that is not affordable.
As with any form of borrowing – make sure you check the small print and pay very careful attention to the interest rate. APR on a doorstep loan is usually on the high side. You can shop around and check rates at the official UK website www.lenderscompared.org.uk
Reputable doorstep lenders are members of the Consumer Credit Association who set the standards of service – you may want to check out their own website www.ccauk.org
It goes without saying that you should always deal with a legal and licensed lender – NEVER deal with anyone who is not. You can check to make sure a lender is licensed by checking the Consumer Credit Register at www.fca.org.uk
Doorstep collection loans offer a very flexible and personal solution, they represent lending the way it used to be … loans with a human touch. They may be worthy of consideration but they will not be right for everyone – always seek professional advice first.