Doorstep loans for people on benefits
No doubt, financial stability is an alien concept to most people who are unemployed and on benefits. When you are incapacitated, old, or somehow disabled and relying on benefits from the government, you can’t in all honesty say that you are on top of your finances. I mean, you can’t have enough for a rainy day and when emergencies crop up, you are left with no choice but to seek for a cash advance from a financial institution. When we speak of financial institutions, most people are quick to assume that we are talking about high street banks. Well, here is the reality check – high street banks ordinarily offer loan products to individuals whose credit score is stellar. Does that mean that if you have an average or poor credit rating you are doomed? Of course not!
Doorstep loans have since their introduction been quite instrumental in helping scores of UK citizens with a less than average credit score. Also known as home collected loans, doorstep loans from the sound of their name essentially refer to a loan product that is delivered right to your doorstep by a local agent of your lender. It is very convenient especially if you are immobile and depend on benefits for survival. The arrangement is that a local agent will essentially explain the specifics of the doorstep loans to you, your obligations under the loans and will also be tasked with collecting repayments once every week until the loan you took out is fully repaid.
When you take out a doorstep loan, the lender will give you a book which you will use to record payments you make every week. This is just for recording purposes and to keep track of your loan repayments.
What is the cost of taking out a doorstep loan?
Of course, this is the first thing you need to ask before you make a conscious decision to apply for this type of loan. The loan you apply for should not put too much strain on your finances such that you find yourself tinkering on the brink of bankruptcy. Ordinarily, doorstep loans attract an average APR of 200% or more. The loan repayment is done once every week stretching out over a period of 6 months thus giving you flexibility. However, while payday loans have a higher APR, the difference might not be that big and could, in essence, be the same considering that a doorstep loan takes a prolonged period of time.
What would happen in the event you default on doorstep loans?
Remember, just like other loan products, you are expected to meet your loan obligations on time. However, what happens in the event that you have arrears? Well, the local agent tasked with collecting repayments will definitely explain your options as well as risks and advise you to catch up with your repayments. In most instances, you will be given a default notice and some large doorstep loan companies are known to stop the local agent from further calling you and essentially dealing with your situation from the head office.
What you can be sure of is that the local agent cannot take any of your property simply because you have fallen behind a couple of weeks or so. Your credit rating will of course suffer a beating and if the situation persists, the loan company might seek legal means of getting their money back. It is always important to explain to the lender why you have defaulted to help them work an arrangement that might be agreeable with your current financial situation.
Remember that being in a financial crisis is a normal thing – It does not in any way diminish your societal standing. However, you need to take out a doorstep loan as a measure of last resort. Doorstep loans are pretty expensive and in most cases, the fact that you rely on doorstep loans could be an indication that you have an inherent debt problem. In this regard, seek financial advice before you take the plunge. You will never be sorry for making a decision from an informed standpoint.