What Is A Doorstep Loan?
Doorstep loans, also known as home collected loans, are loans that offer a home credit service. In the past many of these loans were carried out with a face to face service, however as time has moved on, although the loans remain very local based, repayments can typically be made over the phone, online or still in person if required. In addition to this, loans can also be paid out in both cash or a direct deposit into a bank account of your choosing.
One of the reasons doorstep loans are popular is because they offer a line of credit to people who might struggle with mainstream lenders and it might be the only option available for people that don’t have a bank account. Before applying for a doorstep loan, you need to consider what the repayment rates will be and how much you’ll be paying back to ensure it is affordable for you.
Doorstep Loans – How They Work
Most doorstep loans are used as a short term credit solution, this might be to cover unexpected expenses or to help with short term cash flow. Short term loans are typically taken out over a period of up to a year and they tend to be no more than £1000. When applying for a doorstep loans, it’s important to remember what a representative will likely visit your home upon applying, this is to discuss affordability and to check any documentation with you.
If you take out a doorstep loan, then you need to ensure you clearly understand the repayment terms and whether you repay weekly, fortnightly or monthly. Doorstep lenders are regulated by the Financial Conduct Authority (FCA) and many are also members of the Consumer Credit Association (CCA), this helps to ensure you’re lending from a responsible lender and not a loan shark. Doorstep loan agents can only request repayment from you and it’s important to remember they are not bailiffs and have no power to remove goods.
Is A Doorstep Loan Safe
The simple answer is Yes. Doorstep lenders are regulated by the FCA and many also belong to the CCA. Before choosing to apply for a loan you should ensure they are FCA compliant and being a member of the CCA is a bonus as well; just like ourselves. Doorstep lenders will only discuss a loan with you if you have approached them and they can only discuss the initial amount you wished to apply for.
Should you wish to apply for more or less credit, then they will need to revisit you with new paperwork. You should also ensure you are given time to think about the loan and they should also not push you into getting a loan. At Forward Finance we carry out a number of checks before giving out any loans and will work with you to ensure it is right for you. We only process the loan once both parties are happy with the agreed terms.
Why Do People Use Doorstep Loans?
Many people struggle to get credit from mainstream lenders and this can be for many different reasons. Doorstep loans are typically much easier to apply for and with them being local companies, they typically use both credit checks and affordability checks to base their decisions on and typically have different lending criterias compared to mainstream companies. Some of the reasons why people use doorstep loans are:
- Affordability is taken into account more than mainstream lenders
- Doorstep loan companies are typically local and dealt with in person
- Lending criteria is different to that of major loan companies or banks
- They will work with you to ensure repayments are met
Should I Get A Doorstep Loan?
This is entirely down to you and your personal circumstances. Many people choose doorstep loans as they feel more like a person than just a number. Doorstep loans offer a much more personal service and they are typically easier to apply for compared to mainstream lenders. Before taking out any type of loan, you should ensure it is affordable for you both in the short and long term.
