Doorstep loans are a different kind of lending product. These loans are considered an alternative for some borrowers who are looking to get funds when traditional loans might not fit the bill. As the name suggests, the loans are delivered right to your doorstep and based on the home credit or value of the home that you own. These are generally low dollar amount loans and they have short terms for repayment, making them easy options for people who need a little cash here and there.
However, home credit isn’t going to be the ideal solution for everyone. These loans aren’t going to be offered in large amounts, for starters, which limits the customer base right away. Not only that, but you have to own your home and have the value in it to get these loans. A lender won’t want to try to collect on a home when the renter is the one who owes, after all.
Home credit doorstep loans allow the lender to call your home or show up at your home to collect repayment, too. They come with a high interest rate in most cases, because of the nature of the loans and how simple they are to get in most cases. Most often referred to as usury and predatory lending. Of course, they can also be dangerous.
Doorstep Lenders Need to be Checked Out, Too
Just because someone shows up on your doorstep and claims to be able to offer you a loan doesn’t mean you should take them at their word. While doorstep loans are a real thing, the people selling them aren’t always working with your best interests in mind. Not only that, but if they’re not telling you the details or terms of the loan, they could be setting you up to fail from the start. This could be a form of illegal lending by a loan shark.
Don’t just take a loan from someone who shows up on your doorstep without checking out their FCA record. This is proof that they are authorized by the Financial Conduct Authority to do business and offer the loans that they provide. If companies cannot produce documentation or show you credentials to validate their reputation, they should be considered suspect.
These loans can be a useful tool to have on your side, but like all lending and financial products, you have to make sure that you know who you’re working with so that you don’t get in over your head or create a situation where you’re forced to repay hundreds of dollars in interest for just a few hundred dollars in credit.
Consumer Protection From a Doorstop Loan
One of the best aspects of the doorstep lending process is that when you borrow money, you must request this contact—lenders can’t just call or show up and offer you money. They must only reach out to people after contact has been requested. They’re also subject to a lot of other rules and regulations so that consumers don’t get taken advantage of, and they will need to be registered properly to do business in this role.
It’s a criminal offense for doorstep lenders to call or show up at your home without your prior consent, so if you feel like you’re being harassed, make sure that you tell the lender that you know your rights. In most cases, however, these lenders will follow the letter of the law to stay in business. They may charge the most fees that they can and the highest interest rates that they’re allowed to charge, but that’s all for the convenience of easy lending for those who might not have good credit or another way to get the money that they need.
There is something to be said for getting to know your options before committing to one type of lending or another. That’s also the best way to avoid loan sharks and predatory lenders who might not have your best interests in mind.
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