Debt advice when you’ve borrowed from doorstep lenders
Doorstep Loan Debts overview
Doorstep loans (also known as home-collected loans) are typically supplied by a local agent who provides you with cash money or, less frequently, vouchers. Over the following weeks or months they’ll then visit your home to collect cash repayments; most doorstep loans run for between six to nine months.
Some of the largest providers of doorstep loans include Provident, Greenwoods and Morses Club.
You should usually expect to receive a payment book so that you have a hard copy record of all payments made and the balance that remains outstanding.
This form of credit has been used successfully for decades, but they aren’t without their problems, the most serious of which is the ease with which they can be mixed up with loan sharks.
Doorstep loans from loan sharks
It’s vital that when using this form of credit that you’re confident the representative that you’re dealing with is not a loan shark, which resort to intimidation, threats and sometimes violence to recoup obscenely overinflated costs; studies show that these illegal lenders target the poorest of households with 825% APR loans – a practice that has hit around 200,000 households over the past three years.
Warning signs that you should look out for include:
- There is little or no paperwork.
- They refuse to provide clear explanations or specific information, such as interest rates.
- They remove items from your possession as ‘security’, such as your driving license or passport.
- They refuse any offer of full repayment.
- They become threatening.
Worried about debts that won't go away?
The advantages of using Doorstep Loans as a credit solution
- Doorstep loans are often seen as a convenient, fast way to access credit – providing for an instant decision.
- Doorstep loans are often used by those with less-than-average credit ratings
The disadvantages of Doorstep Loans as a credit solution
- Doorstep loans are an incredibly expensive way of securing credit, with an average APR rate of 200% or more. Despite this, they still work out as a cheaper form of credit than Payday loans.
- If you make a late repayment you may feel apprehensive about the face-to-face nature of dealing with your creditor.
- As the loan isn’t usually credit scored and as the application process is far less strict than with mainstream lenders, you may take out a doorstep loan only to find that you later can’t afford the repayments.
Debt help tips for tackling Doorstep Loan Debts
- As a first step you should seek free, impartial advice as to how you can tackle your overall financial situation and whether there are alternative debt solutions to manage your debt.
- If you’re juggling numerous debts or are stuck in a cycle of borrowing, explore your debt solutions as a priority. During this process you should communicate with all your lenders as to the steps you’re taking to tackle your financial problems.
- As soon as you’re aware of a problem, and ideally before missing a repayment, do your best to contact your representative, who may be able to re-work the loan for lower repayments.
IVAs – A potential debt solution for Doorstep Loan debt
If you’ve found yourself confronted with increasing doorstep loan debt and a worsening of your financial situation, an Individual Voluntary Arrangement may be a suitable debt solution for your circumstances.
An IVA allows you to repay your debts at lower rates than you’re currently paying, over either 60 or 72 months.