More and more lenders have started offering home collection loans, also called “doorstep loans”. These are a type of personal credit that the lender delivers to your front door. The transaction is usually handled by a local agent that oversees a small area. As for the terms and conditions, these are discussed face-to-face once the agent arrives at your home.
Unlike the standard loans that banks offer, home collection loans do not have fixed terms and conditions. Most lenders are usually prepared to negotiate with their clients in order to come to a mutually profitable agreement.
This having been said, there is more to doorstep loans than simply having the money delivered to your home. Although this is the May selling point of this type of debt, there are several other advantages, and also disadvantages that you must take into consideration.
Home services can make getting a loan extremely easy
The fact that you can get a home collection loan without having to go to a bank can be extremely useful if you either are unable to leave your home or simply do not have the time for it. In most cases, the request to talk to a representative is done through the lender’s website or by calling a specified number. Once the request has been made, a representative should arrive at your doorstep in a few days.
You can discuss all terms and conditions with this representative, making it easy to get a loan without even leaving your home once. This also means that there are no hidden charges and the representative will answer any question that you may have. Once the agreement has been signed the money will be delivered to your home.
Doorstep loans are great if you do not have a bank account
Most lenders that offer doorstep loans allow individuals to borrow money either cash or through a prepaid card. This makes it a good choice if you do not have a bank account or simply do not want to involve the bank. Furthermore, repaying the money is done in the same way in which you receive it. The representative will come to your home to collect the money.
Depending on what terms you have agreed to, you may be required to pay weekly instalments, monthly ones, or to repay all the money at once.
There are restrictions that you must keep in mind
One of the biggest restrictions when it comes to home collection loans is the limit imposed on how much money you can borrow. Most lenders will only agree to give out loans of up to £800. While it is possible to borrow more money, you will have to already have a good relationship with the lender or have a very high credit score.
Another restriction that you must take into consideration is the fact that doorstep loans are usually short-term loans. While the maximum duration of the loan will be different depending on the lender, most agreements have a maximum limit of 3-4 months.
Home collection loans are still somewhat new and many lenders are still experimenting with different types of offers. This type of loan offers, in many ways, more transparency and flexibility than the ones offers by banks, especially when considering that all terms and conditions are established and discussed, face-to-face, with a representative.
This having been said, these loans also have restrictions that limit their usefulness. While they may be great if you need a relatively small amount of money for a short period of time, those who need more than £1000 will be better off getting a personal loan from a bank.