Doorstep loans are not novel. They are as similar as any other loans. The only difference is that you will get money on your doorstep. You can apply for these loans by filling out the application form. Your lender will arrange for a representative to hand in money on your doorstep, and therefore, they are also known as home credit loans.

Because a representative will visit your home to hand or collect money, additional fees will be charged to you, which makes home collection loans quite expensive. They are similar to payday loans because they come with a very small amount of money, which is particularly ideal for funding your emergency expenses.

The repayment length is also small, which is, in most cases, not more than a month. Your lender would prefer to get all the money on the collection date.

Steps involved in doorstep loans

Here is how you can apply for doorstep loans without any hassle:

• Assess your needs

First off, you need to determine how much amount of money you need. For instance, if your washer and dryer are out of action, the repair will cost you about £300. You cannot expect your lender to loan you the whole sum you need.

Do not forget that you will have to pay interest on top of what you borrow. Interest adds to your total amount of debt. If your budget has the capacity to pay only $300, you should borrow less than that so the total debt payment does not exceed £300 due to added interest.

You should determine your repaying capacity so you do not fall into debt. Experts recommend using savings to meet unexpected expenses and using loans only when your savings fall short of. You should never borrow more than you need. Calculate your affordability based on your current financial condition.

• Provide accurate financial details

Having said above, doorstep loans are similar to payday loans; your lender will not run hard checks. One of its benefits is that you can protect your credit score. The lender will evaluate the potential risk involved in lending you money based on the financial details you provide in your application form.

Make sure you do not shoot a line about your income, otherwise you will face difficulty in the settlement of your debt. A lender would check the average spending to ensure you will not have any problems paying off the debt.

• Check your credit score

Doorstep loans in the UK are particularly aimed at funding emergency expenses. Lenders generally do not run hard checks, but it does not insinuate that you can qualify for such loans despite a very poor credit rating.

You should carefully analyse the bare minimum of the score a lender accepts, so you do not face a rejection. Get your credit report from all credit reference agencies and see if there are any unidentified accounts. Sometimes, you may find erroneous details that you should get fixed before applying for a loan. It may take at least a month to have those errors removed from your credit file.

Do research to pick a lender that accepts applications with your credit score range. It will lower your chances of rejection. Bear in mind a few lenders will run hard checks. Get this information before you apply to them. Hard checks will leave search footprints on your credit report. Inquiries on your credit report will lower your credit points.

You should apply for a loan from a lender who runs soft checks if you cannot afford to lose your credit points.

• Provide documents

Your lender will gather information about your income and expenses through the application form. However, a few of them will ask you to submit proof of identity and income documents. Proof of identity is not needed if you are borrowing again from the same lender, as they will have their data saved, but income documents will be required every time you put in a request.

You will need to send last month’s withdrawn pay slip as proof. Your bank statement will be preferred if you are self-employed. In case you are out of work, passive income sources such as a side gig will come in handy. You can also treat your unemployment benefits as your income. Have all your documents ready to speed up the approval process.

What else should you know about home collection loans?

Not all lenders offer the facility of doorstep service. Those who provide home collection loans charge high interest rates and fees. The annual percentage rates for them can be as high as 1500%. You should go over your current finances to ensure you will not miss the payment.

A few lenders may allow you to make payments for weekly instalments, which means an additional burden of fees. Collection fees will be charged for each instalment. You should drop the idea of a weekly instalment payment plan to save your money.

You may also find a few lenders claiming to provide guaranteed approval loans. Remember that no lender can guarantee that you will get the nod without running an affordability check. You should not believe such claims because these lenders can be scammers and charge extortionately high interest rates.

It is your responsibility to check whether or not the lender you are borrowing from is authentic and legitimate. Check if they are registered lenders. You should borrow from a non-registered lender on no account. They might be pursuing unethical lending practices.

Benefits and drawbacks of home credit loans

Here are the benefits of home collection loans:

Here are the drawbacks of doorstep loans:

The bottom line

You will not face any difficulty getting the nod for doorstep loans, but make sure you have the repayment potential. You should carefully determine your borrowing needs. Make sure you are borrowing only to fill the gap in your savings.

Doorstep loans come with several drawbacks. Bear in mind the repercussions of missed payments and defaults while using these loans. You can consider other alternatives as well if you wish so.