Doorstep loans, also known as home collected credit are cash loans delivered to your doorstep. They’re one of the few lender types that pay your loan in cash and not into your bank account. Subsequently, doorstep loans are a popular choice amongst consumers who don’t have a bank account. So, if you don’t need a bank account for this type of loan then how do you make the repayments? They’re collected from your home by a representative of the lender.
Your loan is arranged after an initial online or telephone enquiry and then followed up by a home interview with one of the company’s representatives. They’ll take some details from you and assess whether you’ll be able to repay the loan. From initial enquiry to payout, turnaround is normally 3-5 working days.
What not to do
Most doorstep lenders will not report your repayment history back to a credit reference agency. That means this product is not a credit builder - so if you’ve got a bad credit profile and you’re looking to take out a small amount of credit to rebuild your credit rating, this type of borrowing is not going to help you. If you have a good credit rating you’re also on the wrong page as you'll be able to access APR’s of less than 10% by applying for either a bank or supermarket loan.
As these types of loans are collected from your doorstep, companies can decide not to lend to you based on where you live and one of their primary requirements is that you can’t live in a block of flats that has a buzzer to gain entry into the building. Doorstep lenders can also choose not to lend to you based on your age. Like any other loan you have to be over 18, but some lenders in this sector won't lend to you unless you’re over 21 and in some cases, over 25.
Pricing and things to watch out for
Expect high rates for the convenience of a doorstep loan with representative APRs between 190% and 650% APR. You’ll be making weekly payments with repayment periods from 14 weeks to 52 weeks. Doorstep lenders offer loans from £50 - £1000, but it is worth noting that some companies offer less to new customers and will only lend out upwards of £500 if you’re an existing customer. Doorstep lenders use self-employed collections agents who live in the community that they work in. If you make an application to a doorstep lender make sure you know the name of the person who is coming to see you, prior to their visit. When they arrive, check their ID and confirm that they are representing a licensed lender.
Warning - doorstep lenders offer high cost credit and provide what the Choose Wisely team have dubbed a loan of last resort. If you have poor credit and are looking for a personal loan, in the majority of cases rather than opting for a doorstep loan you’ll be better of comparing options using our bad credit comparison tables.