Doorstep loans are payday loans. The only difference is that an agent will hand in and collect money on your doorstep. These loans can be more expensive than payday loans as the fees for providing doorstep service will be added to your debt payment.

Doorstep loans have existed since direct lending existed. This is the most convenient method of borrowing as it involves fewer formalities and the money is offered on your doorstep, called home credit or collection loans. However, they are subject to the risk. If you do not borrow money with caution, you can fall into debt.

Home credit loans are very small loans, particularly designed to fund emergencies. The repayment length of these loans is not more than a month. You will have to pay back the whole money in full on the due date. The agent will collect funds on the agreed due date.

If you fail to pay off, the due date will be extended to the next payday cycle, but this time, late payment fees and accrued interest will be added to your account. Some doorstep loan companies can offer weekly instalment plans, but this will not help ease off the payment burden.

The increased demand for doorstep borrowing has attracted some people who want to extortionate money from credulous customers. They pretend to be genuine or authorised doorstep loan companies and charge very high-interest rates. This makes the debt so expensive that borrowers fall into debt.

If you are looking to borrow urgent doorstep cash loans, you should ensure that you borrow money from a responsible lender. Finding the authentic doorstep lending company can be difficult, but it should not be if you follow the following steps:

  • Check for the registration

First off, you should check the FCA registration. Doorstep lending is not illegal, but you must need a registration from the Financial Conduct Authority (FCA). All lenders are required to get registered with the FCA to provide any kind of loan, including doorstep loans.

You can check the FCA registration number by visiting their site and typing in the name of the loan company you want to borrow from. Once you enter the details, you will get all registration details. If the lender is not registered, it will immediately inform you that the company is not registered. You should be wary of such companies when it comes to applying for a doorstep loan.

  • Are you receiving any promotional emails?

Next, you must look at whether you receive messages and emails about cheaper loan rates or limited-time offers. No lender is allowed to market their financial products in a way that persuades or prompts people to borrow money. If any lender does so, they cannot be authorised and genuine. You can complain against such lenders in order to prevent other gullible borrowers.

  • A pushy approach is used to allure borrowers to fill in the form

Another thing to look at is what features and benefits they highlight in their landing pages. An authorised lender will never use ambiguous terms in their content. They will clearly tell you the interest rates and APR they charge, the repayment term, late payment fees, default fees and so on. If no information is closed regarding this, you should immediately understand that the lender is not genuine.

According to the FCA guideline, no lender can sign off on a loan without a credit check. If you find that the lender has advertised that they provide doorstep loans with no credit check, this must be from a loan shark. You should avoid such kinds of loans because you will be charged very high-interest rates.

This will make the debt much more difficult to pay off. As a result, you will end up rolling over the loan and eventually fall into a debt trap. This is how they make money from your situation.

  • The loan is offered with a 100% guaranteed approval

No lender can provide a 100% guarantee because they will have to assess your credit score and repaying capacity, and this cannot be done unless you formally apply for the loan. Even if you get a pre-approval interest rate, it cannot be guaranteed that you will get money at this rate when you apply for the loan. This is because your credit rating and other financial factors will be checked. If any lender is promising a guaranteed approval, do not trust. This must be a loan shark.

The Bottom Line

You can easily find the difference between authorised lenders and loan sharks. If the lender is not registered with the FCA, make false promises like “100% guaranteed approval”, use a pushy approach to prompt you to fill in the application form and send promotion text messages and emails, it is a loan shark.

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