Doorstep Loans Explained
When we think about doorstep loans we often associate them with controversy because they are one of the highest cost credits around. So you may be wondering if they actually have any positive effects. It’s no secret that doorsteps loans haven’t always had the best reputation, so in this short blog we’re going to tell you everything you need to know should you be contemplating taking one out. Doorstep loans are exactly what they say on the tin, they are a short term unsecured loan and the whole process from application to payment usually takes place at your doorstep this means your home address not the local shops or the neighbours.
How Does It Work Taking Out A Doorstep Loan
With most companies on the market you can start the application process online but they will 100% want to meet face to face once this is completed. Doorstep loans usually range from £200-£1000 but don’t pin your hopes on receiving the full amount if you’re a first time lender, they usually take a few days for funds to be issued and will then most likely be paid back in weekly instalments.
Theo good thing is that interest rates are usually fixed and you know exactly what you will be paying back, keep in mind these rates are typically quite high. The company’s representatives will arrange a time to visit your home every week until the amount you agreed on is paid back in full. Home visits may be subcontracted to self employed representatives who live locally.
How Much Does A Doorstep Loan Cost?
Doorstep loans haven’t been reined in by the FCA like the average payday loan, unlike payday loans there's no cap on the amount of interest rates and the amount of interest that can be charged daily and overall by lenders. So it’s important to keep in mind that doorstep loans can’t still charge you interest rates through the nose and any loans can be rolled over into larger amounts allowing debts to spiral out of control.
Do You Get Credit Checked With A Doorstep Loan?
Not all lenders will carry out credit checks when you initially apply for a doorstep loan, but many will carry out a hard credit that automatically shows up on your credit file and can affect your score. If your credit score is poor then this doesn’t mean you will automatically be declined, doorstep loans are typically one of the best options for people with poor credit and more often than not acceptance is made on your affordability rather than your poor credit score.
What Are The Alternatives To Doorstep Loans?
Credit Builder Cards - Although these cards have lower credit limits and higher interest rates than your average credit card they come with a more flexible credit criteria and are specifically designed to help repair or build your credit history. Most lenders give you an option to review your credit limit at as little as four months.
Guarantor Loans - With this type of loan a close friend or family member will usually vouch for the person obtaining credit, meaning they will pay the debt should the borrower default on payments. Your guarantor will usually have to have a good credit history and show they have repaid any of their own debts. Alternatively you may want to think about taking out a logbook loan this would mean securing debt against your vehicle, but failing to make repayments could leave you without your vehicle.
Payday Loans - You may want to look into a payday loan although they usually come at a higher cost, over the years though lenders have been forced to be a little more fair by the FCA, these types of loans now have a maximum interest rate of 0.8% per day and anyone borrowing is legally not allowed to be asked to pay back anymore that twice the original sum. Funds are typically transferred straight into the borrower’s bank account and repayments will be repaid in the same way.