If you need to borrow money for an emergency but you don’t have a bank account, will a doorstep loan company help you? Yes – doorstep lenders do work with borrowers who have no bank accounts.
In this article, 786 Loans looks at:
- what is a door to door loan?
- can you trust a doorstep lender given the recent bad publicity about them?
- do I need a bank account to take out a doorstep loan?
- do I need a bank account to take out a payday loan or a short-term loan?
- if you have a bank account, should you choose a doorstep loan or a payday/short-term loan?
- finding the best payday loan or short-term loan deal.
What is a door to door loan?
A door to door loan sometimes called a doorstep loan, is a type of loan where you receive the amount you’re borrowing in cash and then you also make your repayments in cash. Instead of repaying by direct debit or by sending a cheque to your lender, one of their agents comes around every week and they collect an agreed amount from you at home.
Most doorstep loan providers will allow you to borrow between £50 and £1,000. If it’s your first loan with a lender, it will normally be for a smaller amount but, as time goes on and you’ve shown that you can make the repayments on time and in full, the amount they’re prepared to lend you goes up. One doorstep loan provider allows customers they have a long track record with to borrow up to £2,000.
Doorstep lenders are generally quite comfortable with lending money to people on benefits. Just like payday loan and short-term loan providers, they are also more relaxed about lending money to people who have less than perfect credit records.
Doorstep loans are expensive. According to Citizens’ Advice, a £500 loan taken out of a year will cost you £936 – your agent will collect £18 every week from you when they come to your home.
Can I trust a doorstep lender?
Doorstep lenders have been around a lot longer than payday loan and short-term loan companies. Just like payday loan and short-term loan companies, all doorstep lenders must be licenced by the Financial Conduct Authority (FCA).
Doorstep lenders have recently been the subject of some controversy though.
Citizens’ Advice research suggests that one in ten doorstep loan borrowers were approached by an agent to take out a loan – this is illegal. The same research also suggested that, if a borrower got into trouble making their repayments, their agent pressured them to take out further loans when, in fact, they should have worked on a repayment plan with their customer to take the financial pressure off.
In fact, some agents put so much pressure on borrowers that they fell behind on their energy bills and council tax payments to make their repayment. Some doorstep lenders have also told neighbours and family members of a borrower falling behind on their repayments too – this is harassment and it’s illegal.
Do I need a bank account for a door step loan?
Most doorstep lenders don’t require their borrowers to have bank accounts because the loan is paid in cash and a borrower’s repayments are also paid in cash.
Do I need a bank account for a payday loan or a short-term loan?
Yes. Payday loan providers and short-term loan providers do need a bank account. Loans are paid directly into your bank account and your lender collects your repayments via debit card from the same account.
I have a bank account. Should I go for a doorstep loan, a payday loan, or a short-term loan?
The choice is yours however we think a payday loan or a short-term loan for a number of reasons.
A payday loan is normally for between £50 and £1,000 which you pay back all in one go. A short-term loan is generally for between £100 and £2,500 which you pay back over 2 to 12 months in monthly (or sometimes weekly) instalments.
Just like all doorstep loan companies, all payday loan and short-term loan companies are licensed by the FCA. However, the FCA offers added protection to payday loan and short-term loan borrowers that you don’t get with a doorstep loan provider.
These protections are:
- you’ll pay no more than 80p per day interest on every £100 you borrow
- if you miss a repayment, your lender can charge you no more than £15 as a default fee
- added together, the interest and fees you pay on your loan can’t add up to more than the original amount you borrowed in the first place
- if you fall behind on your repayments, your lender must tell you how to get in touch with a debt counsellor (free of charge) who can represent you on negotiating a new repayment plan.
Find an alternative to door to door loans with 786 Loans
Doorstep loans offer you a real option to help out if you need money for an emergency and you don’t have a bank account. They do have problems though because they don’t fall under the FCA’s special protections.
If you do have a bank account, we at 786 Loans think that a payday loan or a short-term loan article is the better option for you. What’s more, we can help you find the best deal available to you.
We’re a broker and not a lender. Our job is to match the right lender with the right buyer. When you apply to us, we’ll negotiate with the lenders on your behalf. It all happens automatically and we can show you the best offer we’ve found within a minute. Our service is free and you’ll pay no more going through us than if you went directly to the lender themselves.
To get started, please click here to fill in our application form.