Amongst the various loans, credit cards and mortgages on offer, there is often a lack of personal touch when it comes to seeking these sorts of services. For those who want to apply for a loan or any sort of credit where they feel they are not dealing with a cold robot, the doorstep loan is ideal. As the name suggests, the loan is brought to your door with the dedicated agent coming round on a weekly or monthly to collect the payments. This type of loan is also called “Home Credit”. Like most financial products, a doorstep loan can come with its advantages and disadvantages and knowing both of these can help make a clear decision if you feel you need to apply for one.
Advantages
As mentioned previously, customers who want to have a personal touch to their financial products will greatly appreciate the service provided by a doorstep loan. While this is one of the main benefits, there are other advantages to this type of loan too. For instance, those who have had trouble borrowing money due to poor credit history can still be accepted for a doorstep loan. The lenders will, however, still work to their own strict lending criteria, and will want to make sure a customer will be able to keep to their repayment obligations.
This is not to say that a doorstep loan is a complicated procedure. The repayment process is a simple and affordable method. Lenders will come round on a weekly basis to pick up payments and the amount is relatively small which can help those who are budgeting while paying off debts.
Borrowers will also feel safe in the knowledge that it is a secure process, as most lenders are cleared with the Criminal Records Bureau. To make sure that a company is legitimate, it is best to ask for references before requesting a service.
Disadvantages
As well as looking at the benefits, you should also consider the downside to doorstep loans.
While the weekly payments are minimal, in most cases the amount being repaid each month is sometimes overlooked and with larger sums borrowed, the minimum payment can amount to more than £50 each week. This can become a problem as customers make look to more debt to cover and maintain payments from previous loans. Even though the weekly repayments are often minimal, the interest charged can be quite high. This is sometimes expected with people who are high risk borrowers and the borrowing period is often over a short period of time.
There is no easy conclusion as to whether a doorstep loan is beneficial. You should consider your own financial situation and analysis if you are prepared to pay back the high APR (Annual Percentage Rate) that doorstep loans comes with. If it is only for a short period of time, and you feel you can manage the repayments, then an online financial service can provide a lender that is legitimate and will suit your financial needs. As with most financial products, it is greatly beneficial to shop around to find the best rates and deals.
Bill Turner is a writer, entrepreneur and father. He likes to spend his free time training for marathons.