Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk. Representative example: £400 borrowed for 30 days.
Total amount repayable is £459.36. Interest charged is £59.36, interest rate 180.5% (variable). Representative 728.9% APR.
We are a licensed credit broker, not a lender.
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Unfortunately in the UK, thanks to the current financial climate that was caused by the economic meltdown of 2008, credit for many people can be tough to get. This can be for a number of reasons, but almost certainly down to their credit score which can be affected by a number of things, including:
For those people that have been rejected for mainstream credit, it can leave them at a serious disadvantage but there are other options available, two of the main ones being payday loans and doorstep loans.
Payday Loans And Doorstep Loans
In some ways, payday loans and doorstep loans are very similar. Essentially they are both unsecured personal loans that are suitable for people who have poor credit. Because they are unsecured (which means there is no collateral or security involved) they often involve higher interest rates that reflect the increase the lender is taking to loan the money. However, there are some important differences.
Loan Term and Loan Amount
Both payday loans and doorstep loans generally cater for smaller loans between £100 and £1000. Payday loans are simple and straightforward. You borrow an amount of money and them simply repay it with your next paycheck or within 28 days, whichever is sooner. Doorstep loans are somewhat different as they are often taken over longer periods of time and extra loans can be taken out to cover missed payments which can result in people owing more money than they thought. This can soon become a problem.
Application And Repayment
Payday loans are simple and easy to apply for, the vast majority being done online. Following a short application, the money can be in your account within an hour or two often. Doorstep loans are different in that the application process is done at home with a representative of the company.
The same goes for repayment, which is why payday loans are proving much more popular than their doorstep equivalents. People tend to like the ease at which they can simply make an online payment to repay their loan and don’t have to speak to anyone. With a doorstep loan, repayments are made to a company representative who comes to your door every week. As well as this making it easy to miss payments and get into a mess if you are out, lots of people don’t want neighbours to know that they have taken out a doorstep loan.
Are Payday Loans Or Doorstep Loans Better?
It’s impossible to say whether doorstep loans or payday loans are better because everyone’s situation is different. What we can say is that in terms of popularity, payday loans tend to win out. In an increasingly technological world, people like the clarity and straightforwardness of payday loans and particularly the fact they can all be dealt with online. Doorstep loans remain an option for people but they are rapidly being seen as a relic from the past.