What is a doorstep loan?
Doorstep loans, also called “home collected loans” or “home credit”, are small loans where the lender will visit your house to collect the money. Doorstep loans are usually paid back over a period of a few months, although they can be paid back over a longer period of time.
With this type of loan, the lender can’t just turn up out of the blue and offer you money – you have to specifically write and sign a request for them to turn up – more details on this are on the Citizen’s Advice website.
Doorstep loans are usually for small amounts of money, normally less than £1,000, although you can get loans of more than £1,000 with some lenders, with the money is lent at a high rate of interest. An agent will call at your home to deliver the initial loan and return weekly or monthly to collect your repayments.
How easy is it to get a doorstep loan?
Because doorstep lenders don’t run credit checks, their loans are quite easy to get, although you do have to wait for them to turn up at your house with the money. However, because a doorstep loan application doesn’t require a credit check, lenders charge you a steep interest rate to make up for the increased risk.
Typically, a doorstep loan is lent over a short period and the rate of interest can be as high as 1,500% APR, compared to our Representative 99.9% APR .
If you’re borrowing to deal with your existing debt, doorstep loans are not the answer. An arranged overdraft, credit card, personal loan or credit union loan may be a cheaper option. If you need extra help to deal with your debt, you can get advice from the National Debtline.
Here at 118 118 Money, we offer much lower rates of interest than doorstep lenders, meaning you pay back much less in total. We take into consideration your current circumstances during your application and make sure you are able to pay us back in monthly sums that you can afford.
How quickly can I get a doorstep loan?
As there’s no credit check and very little paperwork, you can get your hands on the cash pretty quickly. The agent will deliver the money to your door within a few days and will also collect your weekly or monthly repayments. With a doorstep loan, as all transactions are conducted in cash, you won’t necessarily need a bank account either.
With a 118 118 Money loan, the cash gets to your bank account within 24 hours and repayments are managed online. We’ll even text you to let you know when the next payment is due.
What happens if I miss a repayment on my doorstep loan?
There aren’t usually penalties for missing a repayment, but the steep rate of interest means the amount you will need to pay back will be a lot higher. If you don’t think you’re going to be able to repay on time, make sure the lender is the first to know. Pick up the phone as soon as possible and speak to your lender – agree on a new repayment schedule that you can stick to.
If you choose to have a loan with 118 118 Money and we accept your application, then you will have access to us 24/7 to discuss your application or repayments or anything to do with your loan. We want you to know that you are in control of your finances and know exactly how much you need to pay back and when.
Can I lose my house if I can’t repay my loan?
A doorstep loan is known as an unsecured loan, which means you won’t risk losing your home or your car if you fail to keep up the repayments. However, the interest you owe on your loan will mount up very quickly if you fail to make your repayments. You should only consider this type of loan if you are certain you can afford to pay it back.
Are doorstep lenders the same as loan sharks?
No, there is a very important difference between a loan shark and a doorstep lender, even though they both come to your home to collect the repayments.
Loan sharks lend money illegally at very high interest rates and have been known to threaten customers who fail to make their repayments. Remember that you have no legal rights as a customer if you borrow from a loan shark. Doorstep lenders have to be authorised by the Financial Conduct Authority (FCA) and offer you certain rights and protection as a customer. You can check whether a doorstep lender is authorised by running a search of the FCA register or the consumer credit register.
If someone offers to lend you money on the doorstep you should ask to see the agent’s or the company’s authorisation. If they don’t have authorisation, they are probably lending illegally and you should avoid borrowing from them.
Pros & Cons of Doorstep Loans
|Advantages of doorstep loans||Disadvantages of doorstep loans|
|No credit check||Very expensive way of borrowing – with interest rates of up to 1,500% APR|
|Limited paperwork||Your debt can quickly get out of control if you fall behind with repayments|
|No restrictions on how you spend the money||You are limited to borrowing a smaller amount of money|
|Doesn’t require a bank account||Too easy to borrow money you can’t afford to repay|
How can 118 118 Money help?
We take extra steps here at 118 118 Money to beyond your credit profile to understand your current financial situation. If we feel confident that you can pay back your loan comfortably, we’ll be more than happy to help. Our loans are perfect for people with a less than perfect credit history, and we give you a choice of repayment terms – 12, 18 or 24 months – whichever works best for you.
Give our calculator a go to work out how much you could borrow, what the APR would be, what the fixed monthly repayments would be and over how many months you want to borrow. There are no hidden charges with us – even if you want to repay the loan early. We’re here to help – contact us if you have any questions or if there’s something you’d like more information about.