Guide to Doorstep Loans
No matter what experts say about doorstep loans, the financial product continues to draw attention especially among borrowers with bad credit because of its quick cash premise. Advertised by lenders as one of the most convenient personal loans in the market, it's no wonder why doorstep loans are becoming more popular in the UK particularly in the London area.
If you're planning to avail a doorstep loan, here is a guide to better understanding of the product's advantages and accompanying risks.
What is a doorstep loan?
Doorstep loans or door to door loans are unsecured personal loans offered to people who need a small sum of quick cash for personal needs. As its name implies, the money is delivered to your doorstep making it ultra-convenient and hassle-free.
Lenders offering doorstep loans, in general, offer sums starting from £50 up to £1,000 making the product ideal for immediate financial needs like overdue bills, car repair and medical expenses among others. Repayment period may span a few weeks or months depending on your set-up with your lender.
How doorstep loans work?
Because doorstep loans are unsecured, there is no need for collateral or security to avail the financial product. As long as you're of legal age, a resident in London and can provide proof of steady income, you are welcome to apply for a doorstep loan.
To get started, you can find an online lender and request for an agent visit. The agent or representative will pay you a visit at home to discuss your options. Requirements will be collected for assessment. Once verified and approved, your agent will deliver the money to your doorstep. Collection of repayment for the loan is also processed through the agent.
How much does it cost?
Like other unsecured personal loans, doorstep loans come with pretty high interest rates. This is because lenders are taking higher risks lending money to people with bad credit. In general, the average representative APR is set at around 400% though some lenders charge up to 1,500% or more.
To illustrate, let's say you want to borrow £200 to be repaid in 32 weeks. If the interest per annum is 97.5% and the representative APR is 400%, your weekly repayment due is £10 or a total of £320. For better understanding on how APR works, click here.
What are the advantages?
Though the interest is pretty steep compared to traditional personal loans, guarantor loans are advantageous in certain circumstances. The product, for one, is easily accessible and approval can be accomplished within the same day of application. It's a perfect quick fix solution for pressing financial problems. It is especially an ideal option for borrowers who have been refused elsewhere because of bad credit issues.
What are the risks?
When it comes to risks, it is low for borrowers since there is no asset you can lose to repossession. You’ll just need to deal with the higher interest instead. In the event that you miss or delay with repayments, there is a possibility of hurting your already bad credit rating some more.