Unexpected financial emergency expenses can occur in your life at any point of time. Such expenses can create complications and frustrations in life and compel you to opt for additional monetary help. However, it can be a difficult task to arrange the extra money under utmost pressure. The only way to deal with such situations is to opt for an unsecured loan but after that, the new question arises, to find a suitable loan as the loan market is flooded with many lenders and brokers and to choose the better amongst all can be a humongous task.
Unsecured loans are loans in which a person does not have to put any asset (anything from an automobile to a house or any personal valuable) forward, as collateral to borrow a loan. The loan is granted on the borrower’s creditworthiness and the repayment ability of the loan amount. There are many types of unsecured loans in the UK market that aids you to acquire loans very swift and easy and people with bad credit ratings or people on benefits can also apply for such loans in the time of emergency or need.
There is a comparison done between two loans that are widely used by the people in the UK. Doorsteps loans v/s payday loans.
Doorstep loans popularly called “home credit loans” are typically a personal loan that is finalized with a short period and low-interest rates for a fixed period of time and are favourable because it helps people to get loans at their doorsteps. It is generally offered to people on low income, people with serious health conditions and illness or who work in hectic schedules and do not have much time to visit loan firms and find it difficult to borrow money from other sources. Doorstep loans offer you funds in a small amount ranging from 50 pounds to 1000 pounds depending on a lender to lender. It enables customers an opportunity to discuss their credit needs and requirements face to face in the comfort of their own houses. A member of the dedicated team from the lender’s office visits your house to discuss the requirements, the procedure to acquire a loan, and also to receive the loan repayments on due dates. This is a convenient and easy option as you need not to worry much about your repayments or due date and is just another justifiable reason, which makes these loan an ideal solution.
Many customers prefer the service as it gives them a chance to manage their repayments in the comfort of their house and at a day that suits them. It allows the customers to discuss their financial circumstances in private and also to enunciate their concerns expressively to the representative from the lender’s team.
Doorstep loans can be acquired without a guarantor! Amazed but it’s true. People can attain a doorstep loan and they don’t have to present a guarantor forward to pledge for them. It is also special because they don’t need to put forward any personal asset as collateral. The loan amount that one person can receive is subjected to a certain amount. However, each lender has their specification and criteria to lend the loan amount to borrowers.
Payday loans or “cash advances” are high-cost short-term (HCST) loans that have a relatively small amount of money, which is lent at a high rate of interest on an agreement that the loan amount will be repaid, when the borrower would receive his next salary or wages on the next payday. The traces of payday loans can seem from back 1700s and it is evident that it is one of the oldest loan forms present today.
Many states have set a limit on payday loans which is generally repaid in a single payment. According to the reports, the market growth of lending through payday loans has grown from 900 million pounds in 2008 to 2 billion pounds in 2012 and 2.8 billion pounds in present. There are 90 payday lenders across 1238 locations in the UK. It is also observed that due to increasing unemployment payday loans is massively being used on daily basis. The major portion of the borrowers, which is 53.4% is between the age group of 26-45 years.
The World Wide Web has made the process of lending and borrowing easier due to which payday lenders have started providing incredibly easy options. In 2015, FCA introduced capping mechanisms to make loans fair and more affordable for the borrowers.
According to the government in last 5 years, 52% payday customers have got debt problems and 15% had made arrangements with the creditors, while 11% were issued a country court judgment and 10% of the people were visited by debt collectors. Such situations also caused consumers to take additional credits to repay for the loans. But it cannot be denied at the same time that the low-interest rates help people in financial emergencies to a great extent if they do not have savings and even if they have a bad credit score.
When we compare two different types of loans it provides an essence of both loans and gives us a right to choose the better for us that has relevance to our needs and requirements. In the end, the choice relies on our hands to opt for the one that is suitable for us. There are also many FCA registered brokers like 786 Loans that works cascade to their capabilities to help you acquire what you need.