In this digital age we have all become used to living much of our financial lives online. From applying for credit cards to looking for personal loans, we’re much more likely to tap everything into a computer and set up automatic repayments rather than make face-to-face contact with those we are borrowing from. However, this isn’t the only way to handle your money, as doorstep loans (also called ‘home collected loans’) offer a more personal type of finance, the old fashioned way.
What are doorstep loans?
It’s normal to apply online for doorstep loans but that’s the only part of the process that is not completed face-to-face. After the initial application an appointment is arranged so that an agent can make a home visit to go through the various options available and for the lender to make some further checks. There’s never any obligation at this stage and all good doorstep loans agents will simply set out the choices and answer questions about terms and conditions. Once the terms of the loan have been agreed between the agent and the borrower then the loan is handed over – in cash. There is no need to process transactions through a bank account and repayments are collected at home too, with the agent visiting to collect the payment each week.
How much can you borrow with doorstep loans?
Just like any other type of finance, the options available via doorstep loans depend on an individual’s personal circumstances. In general, these home collected loans are available for amounts, between £100 and £2,500, and different rates of interest apply depending on the terms agreed, all of which is discussed during the initial meeting with the local agent. Repayment periods vary as with any other loan – choose a shorter period, such as 14 weeks, to repay the loan faster in larger chunks, or a longer period – such as 52 weeks – to pay the money back in smaller, more manageable chunks.
Who borrows home collected loans?
Anyone can apply to borrow using this form of personal finance. Doorstep loans are especially well suited to people who don’t want to use bank accounts, anyone who can’t get to a bank, those who don’t want to deal with direct debits and automated money transfers, or where there is a mistrust in mainstream banking systems. Anyone who doesn’t have a bank account and doesn’t want to be forced to open one in order to access finance will find doorstep loans particularly useful and this type of loan also has benefits for people who have a less then perfect credit score.
How are doorstep loans different?
The most obvious difference is the convenience of the home collected repayments, an easy alternative to going to the bank to make payments or setting them up automatically. Repayments are made on a weekly basis, which can be simpler to manage, as they are simply factored into weekly budgets. The loan needs to be repaid just like any other type of loan, and there will be penalties if the money is borrowed and then not repaid, however, there are not usually any late payment fees if a payment is made late (as long as the payment is made). Payments are tracked using a personal payment book, which is an easy way to keep an eye on what has been repaid and what remains.
What about security?
Doorstep loans lenders only work with trained agents and one of the most appealing elements of this type of finance is that there is no one else involved. Many of us have concerns now about bank fraud, digital hackers and the lack of transparency in the banking system and none of these apply to doorstep loans, as the payments and repayments are all made in cash. There is no need to worry about payments going astray because they are handed over in person and the payment is recorded in the personal payment book. If direct debits and standing orders – or any kind of automatic payment that is taken without your action – worry you the doorstep loans are a great alternative finance option.
Finance the old fashioned way
Doorstep loans have lots going for them, from the easy to manage repayments to the flexible borrowing. However, perhaps the biggest draw for many people is the opportunity to manage borrowing with face-to-face contact, without dealing with big, impersonal banks and with the kind of old fashioned interaction that takes the fear out of personal finance.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read more about Alex Hartley