Home Collection Loans – A Guide To Safe Borrowing
Home collection loans are personal loans that require no security and hence are readily available to a wide section of the UK population. They are relatively small cash loans which are arranged face to face with an agent who will call round to visit you in your own home to discuss and agree your application. The loan will then be delivered to your door, often by the same agent who will then also call round at an agreed interval to collect the repayments. Home collection loans go under various other names and are most often referred to as home credit or doorstep loans.
The minimum loan is usually around £100 or so and the maximum is normally no more than £1000. The repayments can be divided up into small weekly sums and spread out over a term of up to 52 weeks.
One of the big attractions of the home collection loan is the flexible lending criteria. There’s no security required and, whilst they are subject to a credit check the ultimate decision is based on affordability and, as we’re talking small loans and weekly repayments spread out over a year or so, this means that a great many individuals are eligible who may not find themselves accepted for credit elsewhere.
Home Credit Process:
It all starts with a phone call or online application. You’ll need to prove you’re an adult and UK resident. You’ll also need to agree to a credit check and for an agent to visit you at home. Did you know that’s it’s a criminal offence for a lender to visit your home and make an offer to lend you money if the visit is not as a result of a specific request from you. These initial basic details will usually be enough for the lender to make a decision in principle after which arrangements are made for the visit of the agent who will discuss the application and all the workings of the loan before checking affordability and ultimately making the official loan offer to you.
Home Collection Loans – What To Look Out For:
Check The Lender Is Authorised: Anyone lending money on your doorstep has to be licensed – it’s the absolute law. The body that represents and governs doorstep lenders is the Financial Conduct Authority or FCA for short. The authorisation of the agent who visits you usually comes under the license of the lender they represent and that’s legally fine.
Always check and ask to see the agents or lenders license or check if a home credit provider is authorised by checking the register on the FCA website at www.fca.org.uk.
Do NOT, under any circumstances borrow from any unlicensed lender and make sure you report them immediately – see our article on Loan Sharks.
The Cost Of Home Collection Loans: A small loan with repayments split into weekly amounts and spread over a large number of weeks makes the loan appear cheap. Whilst the repayments may be comfortably affordable be very careful because the interest you are actually paying can be high … sometimes very high and more than a bank loan and overdraft and even a credit card.
To make sure you are getting a fair deal an independent home credit comparison website has been set up. It’s called Lenders Compared and you’ll find it here: www.lenderscompared.org.uk. Always check the cost and compare it against other local lenders.
Fair Trading And Codes Of Practice: These days many doorstep loans providers belong to the Consumer Credit Association and therefore abide by the CCA Codes Of Practice. Choosing such a company may provide a little more peace of mind and you can check the details at their website www.ccauk.org.
For any further information and complaints then you should approach the Financial Ombudsman Service at www.financial-ombudsman.org.uk
Home Collection Loans – Do You REALLY Need To Borrow?
It is often really tempting to turn to a doorstep loan. It can seem an easy fix if you have bills you can’t pay or expenses you can’t meet but, if you’re struggling with the day to day cost of living then home credit, or indeed any form of borrowing may be the worst thing you can do. Borrowing at a high interest rate is only going to make matters worse in the long term. If this describes you then we suggest that you get free advice from a debt The Money Advice Service which is a completely free and totally independent service. Check out their website www.moneyadviceservice.org.uk which is packed with great advice and useful information about borrowing and managing your money.
The Golden Rule – Get Advice!
It sounds obvious but before you enter into any financial agreement you must understand exactly what it is you’re committing to. We ALWAYS recommend that you take independent and professional financial advice before agreeing to anything.