What are doorstep loans?
Doorstep loans are a form of borrowing money that, as the name suggests, can be delivered right to your doorstep in cash. Doorstep loans are particularly popular due to their unrivalled accessibility, as virtually everyone can take out a doorstep loan even those individuals who are currently receiving government benefits or are currently unemployed. In fact, doorstep loan providers actually specialise in lending money to these individuals who have tried and failed to get funding elsewhere whether that be because they have CCJs or arrears and/or have a poor credit rating.
It is important not to mistake the service offered by this doorstep lenders, with that offered by those associated with criminal "loan sharks" who are never an advisable option. Doorstep loans are established and fully licensed organisations that will have offices with the larger ones often having several nationwide. Another difference between the two is the way you pay back the money you have borrowed. For example, with loan sharks there is no fixed repayment schedule whereas with doorstep loan providers, you will have a contract stating the terms of your loan and how it will be paid back.
Doorstep loans can usually be obtained online and it only takes a few minutes before you are offered the money and the repayment rate and schedule is laid out for you. In the majority of cases, the next step is for a local agent to visit you at which point they will provide you with the paperwork you need to sign and on completion, pay you in cash.
Why use doorstep loans?
One of the main reasons that individuals use doorstep loans is that they provide a hassle free, simple alternative to traditional loans. Usually applying for loans is accompanies by a mountain of paperwork, where you will often need to justify your need for the loan and prove your ability to pay it back, and that's if you even have the right credit history to allow you to have it. However, by using a doorstep loan company you are virtually guaranteed acceptance and the provider will even come round to your house at your convenience.
When you have confirmed that you are happy with the loan amount, the repayment schedule and the amount you will pay back, the provider will send out an agent to come and visit you in the comfort in your own home so you really don't have any of the hassle of going to banks or preparing the paperwork required by other more traditional loan providers. They will even give you the cash there and then, meaning whatever you need it for you can have it within minutes of signing the agreement.
Can I get a doorstep loan even if I'm on benefits?
Absolutely. In fact, doorstep loans often target these kinds of individuals as they require no security and do not do a credit check on the individuals concerned. This means that regardless of your credit history, employment status or dependency on government benefits - whether this be due to disability, unemployment or even those relying on pensions. In situations like this where the fixed monthly sum you receive doesn't allow for much saving, unexpected costs whether voluntary (such as the desire for a holiday or some remodeling) or mandatory (broken down vehicles, new boiler etc) doorstep loans can provide the much-needed half-way point between traditional long-term bank loans and the high interest pay-day loans.
In the vast majority of cases, you will be required to submit proof that you are on the particular benefits as much for verification of your identity as your ability to repay the loan, as the latter is rarely checked by doorstep loan providers. The good side of this is that you are unlikely to be turned down for a loan but the down side is that because of their acceptance of almost all applicants, they are taking a much bigger risk that the individuals will not repay the loan. You might think that this doesn't effect you, but unfortunately this is the reason behind the high interest rates.
The conclusion however, is that even if you are suffering from a bad credit history from issues such as individual voluntary arrangements, missed payments, arrears, foreclosure and county court judgments, you will still almost definitely be able to benefit from doorstep loans.
How much can I borrow?
The amount you can borrow with a doorstep loan changes depending on the provider but can often range from as little as £50 or as much as £2500. You may be able to find doorstep loan providers who will offer more than this but regardless of the amount you borrow, it will be paid back in minimal weekly amounts over a predetermined time period.
Doorstep loans are a good half-way point between those who would normally take out a payday loan and those looking for a full loan. For example, a payday loan would be be unlikely to give you anywhere near £2500 but it still provides the simplicity and flexibility that would not be offered by a full bank loan.
How long do I have to pay the money back?
The amount you pay back each month is negotiable and can be spread over 20 - 52 weeks depending on how much you borrow and how quickly you wish to pay it back. Usually the more you borrow, the longer you will take to pay it back. However, longer length repayment schedules will usually result in higher charges so it's always a good idea to pay back the loan as soon as possible.
Whilst this is good advice, it's also important to remember that a lot of companies will charge you additional fees for paying off your loan early so if you are thinking "well I might as well get the longest repayment period and then just pay it off when I have the money", whilst you are able to do this, you are likely to have to pay a lot more in the way of charges.
What is the interest rate on a doorstep loan?
The interest rates on doorstep loans are typically a lot higher than traditional loan providers, but a lot less than payday lenders.
With some companies charging as much as 2,000%, choosing the right provider is essential as they differ significantly. However, most providers will charge somewhere from 200% - 800% typical APR.