Doorstep loans, also known as home credit loans, are small cash loans whereby an individual borrowers money and the lender then collects repayments by calling at the borrower’s home. Much of the application process is completed in-person with a local agent and due to the highly flexible nature of these products, loan approvals are typically granted according to the borrower’s ability to repay, as opposed to a standard credit review. This is why home credit doorstep loans are very appealing to people with low income as well as those who lack perfect credit ratings. Some of the companies that offer doorstep loans may alternatively provide shopping vouchers and trading cheques as an alternative to cash and these can be used to purchase goods in certain stores or online.
Doorstep loans typically fall between £50 and £500, however, these modest sums of money tend to come with high interest rates. In many instances, the interest charges for these loans will be higher than that of the typical credit card or bank loan.
Benefits Of Home Credit:
Instant decision – You could have money right away and a bank account may not be necessary.
Personal service – You’ll get service in your own home and can have the same company representative come calling for each of your payments.
No need to have stellar credit – home credit lenders frequently accommodate those who have low credit ratings.
Drawbacks Of Home Credit:
Interest rates are high – Doorstep loans have interests rates that are higher than those of high street lenders
Collections – When you are late making payments or find yourself struggling to make payments, it could be uncomfortable knowing that your lender will come calling to collect
Feasibility – Given that your credit isn’t reviewed and the application process is not as stringent as it is when working with high street lenders, you may wind up taking on more debt than you can feasibly repay
Avoid Being Tempted – You might be tempted to take on a doorstep loan if you are struggling to pay your bills, but borrowing money at interest rates as high as these could cause more problems than it actually resolves. If paying your day-to-day living expenses is a challenge, you might try consulting with a free debt advice service instead.
You should consider the following before taking on a doorstep loan:
Make sure that the lender is authorised:
As per the law, doorstep lenders will have to be authorised by the FCA or the Financial Conduct Authority. Those who work for doorstep lenders do not need an FCA authorisation of their own but can work under the authorisation of the lenders they are employed by.
Visiting www.fca.org.uk and checking the Register will allow you to learn whether a home credit lender has the proper authorisation.
Should you receive a offer for a loan on your doorstep, it is best to request the lender’s authorisation. If this is not provided, this person is likely offering loans illegally and is therefore a loan shark – you should always avoid working with loan sharks.
Loan sharks issue illegal loans and they usually do this from home and with extremely high interest rates and this means that you will not have the same legal rates that an actual customer has when working with a legitimate institution. If you are unable to pay these monies back, loan sharks can become threatening. Loan sharks should be reported to the police straight away, whenever you come across them – visit www.gov.uk/report-loan-shark to find out exactly how to report a loan shark.
The availability of alternative solutions will depend upon your circumstances and your credit rating. If you have a decent credit rating, it could be possible to work with a high street lender and get a loan at a much more reasonable interest rate. If you are applying for a doorstep loan because you already have debt that you are struggling to pay off, you should reconsider and speak with a free debt advice service as these professionals are well-versed in helping people in situations such as this.
Comparing home credit loans:
Lenders Compared is the perfect platform for comparing home credit loans and this independent comparison site is found at www.lenderscompared.org.uk. You do no have to pay money to use this platform. The goal of Lenders Compared is to help you find the right small-sized loan for your needs. They do not have any products or services to sell and there are no adverts or sponsored results on their web pages.
The Lenders Compared website was established after the home credit industry was investigated by the Competition Commission. This is an independent public body. The goal of the Competition Commission is to ensure that there is healthy competition between UK businesses in order to better benefit the economy, customers and companies. For more information on this investigation and to learn more about why this website was deemed necessary by the Competition Commission, visit www.competition-commission.org.uk/inquiries/current/homecredit/.
Home Credit Complaints:
A lot of home credit lenders are members of the CCA or the Consumer Credit Association and thus, these companies adhere to the CCA Code of Practice. Should you ever have an issue with a member of the CCA, you can submit a complaint to the CCA directly. You can visit www.ccauk.org to learn more about the CCA Code of Practice and the Consumer Credit Association overall.
It is illegal for lenders to call your home to make loan offers unless this call is a direct response to a request that you have written and signed. If there is no proper agreement in place, the lender cannot force you to pay back the money that has been borrowed.
If you are unsure of whether or not you have entered into a proper agreement, you can consult with an adviser, for instance at a Citizen Advice Bureau. Visit www.citizensadvice.org.uk to find out more about your local CAB, including those offices that can offer information via email.
If you are unable to resolve a complaint with the CCA or with the lender directly, you should refer your complaint to the Financial Ombudsman Service.
Additional Information & Useful Links
The Money Advice Service:
The Money Advice Service is both free of charge and independent. There is a lot of information that you can find on their website at www.moneyadviceservice.org.uk concerning money management and borrowing money.
Visit this website to learn more about
– Money management
– Loans and cards
– What to do when things go wrong
– Making loan comparisons
CCA – The Consumer Credit Association:
The Consumer Credit Association is the trade association for the home loan industry in the Republic of Ireland and UK that exists to promote acceptable business standards and customer relations. The CCA has been at the helm of the home loan industry for more than 35 years and it represents lending companies and provides assistance and information to borrowers concerning home collected loans.
Authorisation Register For The FCA:
Financial services firms and professionals within the UK are listed by the Financial Services Register when they:
– Have authorisation to do business legally
– Are registered to participate in activities that are regulated
– Have approval to offer services and products
As a independent comparison platform, lenders compared makes it possible for borrowers to compare home credit loans