Choosing a Provider
With a lot of financial services, selecting a provider can be somewhat of a formality with minimal differences from company to company. However, when choosing a doorstep loan provider, it is essential to do your research and ensure that you select the one that is most suited to your requirements. In contrast to most other financial services, it is very rare that you will find a large, national doorstep loan provider because of the nature of the business. Due to the fact that a key part of doorstep loans is that an agent will come to your house to arrange the paperwork and hand over the cash, national companies would need to employ a large network of agents.
The positive side of this is that it is likely that the company you deal with will be located locally so you have a close-by port of call if ever you do have any issues during the term of your loan. However, it could be argued that this lack of nationwide companies with big advertising budgets has also led to an increase in the number of unlicensed companies with questionable methods of collection. With intimidation not uncommon for those who don't keep up their repayments and with APR percentages often going into the tens of thousands, it is vital that you choose a reputable and registered company.
Thanks to the internet it's easier than ever to research different companies in your are and find out how much you could borrow and with what interest rates. It is often these companies that will be the more reputable but once you have decided one you think is offering good rates and is right for you, do a google search for the company itself. If it has a bad track record or has had complaints made about it, the internet will usually show them. A good thing to remember when choosing a provider is that if a company has been established a long-time it is likely to be a reputable provider and conversely, if the company has only been going a year or so, it is best to avoid them - no matter how attractive their interest rates or repayment schedule is. One way of checking this is by using the very quick and completely free "WebCheck" on the Companies House website where you can just type in the company's name and view it's incorporate date (the date the company was registered).
Even the most established and respected doorstep loan companies will be charging a much higher rate than you may be used to when dealing with normal loans, this is a necessary part of taking out a doorstep loan. However, these interest rates are usually a lot less than those offered by moth payday loan providers so if you are concerned that you are being charged too much, a quick google search will allow you to compare the two. That doesn't mean you have to settle for the first company you come across as the interest rates do differ.
Many people turn to payday loans in times of need or when they want to make a purchase they can't afford to pay for straight away. Unfortunately however, the speed in which these debts need to be repaid can lead to even more debt with most payday loan providers setting a maximum of 30 days in which the customer must repay the loan. However, doorstep loans do not limit individuals to these strict repayment schedules but instead provide a similar service but with greater flexibility in the size of the loan, better interest rates and as mentioned, more flexible repayment schedules.
Advantages & Disadvantages
One advantage is the simplicity of the doorstep loan process which has only got simpler since lenders started using the internet. The process starts just by going online and finding a provider, where you would then specify your requirements and they will make you an offer stating the interest rates and possible repayment schedules. If you are happy with that, an agent will then visit you at your home and you can sign the paperwork at which point they will hand over the cash. From that point forward, they would then stop by at your convenience once a week to collect that weeks installment.
This leads onto the next advantages, the amount you pay in installments. Doorstep loans are paid over the space of up to a year with small cash installments paid off each week, directly to the agent. This can be as little as £4 or £5 each week depending on how much you borrow with even the maximum unlikely to be more than £50 per week.
Doorstep loan providers do not require any level of security when accepting a loan application. As long as you fulfill the very minimal eligibility criteria, the lenders will provide you with the sum you require on a short-term basis without having to put up your car or property as collateral. This makes it even more accessible to those individuals who don't have a car or property that they can put up as security, such as those on benefits. For example, those individuals who are on DSS may struggle at certain points during the month as unfortunately the benefits that come through DSS cover only the absolute necessities. Should an unexpected bill or problem arise, individuals on DSS or similar government benefits may require a short term loan to pay it.
Payday loans are the first thought in these scenarios but these require quick repayment so are more suited to those individuals who only only need to borrow for a few days or perhaps a week. Doorstep loans provide individuals with a short term release of cash that can be repaid over several weeks or even months. For example, if an individual with only a couple of hundred pounds of disposable income suddenly receives a £500 bill from a mechanics or a home maintenance man, they would be unable to pay. However, they could take out a doorstep loan for the full amount and then just pay it off at just £15-20 a week.
Whilst doorstep loans are famed for there simplicity and minimal requirements, there are still certain eligibility criteria that must be met in order to qualify for such a loan. The first point on the checklist is that as with all loans in the United Kingdom, the individual applying for a loan must be at least 18 years of age. If they are over the UK, they would then need to have an active UK bank account and be a registered UK citizen. These are three main factors that almost all lenders will insist that applicants meet, but there are additional ones that some companies require. For example, some companies will only lend to the employed and require evidence of their wages going into their bank account each month. The latter requirement is very flexible as most lenders will not question the customers employment.
The disadvantages of doorstep loans are noticeably minimal, which suggests that they are very much a viable option for individuals looking for quick cash. The main disadvantage is obviously the interest rates that are associated with these loans as these are quite higher than traditional loans, with most providers charging somewhere between 200% - 800% typical APR. However, even this has a bright side because when compared to payday loans where APR is generally in the thousands, doorstep loans become a very attractive alternative when in need of a quick loan.