With so many types of loan available, it can be hard to differentiate between them.
Assumptions and word of mouth can generate a lot of misinformation, and with consumers not really knowing the facts, they can end up making ill-informed decisions on their financial borrowings.
Knowing the facts are important and will help you decide if the type of loan you are applying for is right for you.
A Doorstep Loan is also known as Home Credit and is a specific type of personal loan provided by a lender whose representative will visit you in the comfort of your home, if required. We’ve noted the top 5 myths that surround this type of borrowing to help dispel any uncertainties.
Myth 1: Doorstep Loans are the same as payday lending
This is a common misconception. Doorstep Loans provide a short-term lending solution; however, the repayment period is spread over an agreed term, usually between 20 and 50 weeks with no additional interest or charges for late payment.
With a Payday Loan, the borrowing is usually paid back in one lump sum along with any associated interest and charges. Payday lenders have a strong reputation for applying additional interest and charges to your loan and may even offer to lend extra money to cover your repayments. These types of debt can rapidly escalate into a problem if you don’t make repayments on time.
Myth 2: Doorstep lenders don’t do checks
All money lenders must be authorised by the Financial Conduct Authority (FCA) to lend money legally, and those who aren’t authorised by the FCA are breaking the law.
FCA regulation or authorisation also means that a consumer can trust the firm. It ensures that the lender treats all consumers in compliance with strict criteria.
Being regulated means that the majority of Doorstep Lenders will indeed carry out both a credit check and an affordability assessment before issuing a loan to you. Proof of identity, address, and income may also be required.
Myth 3: Doorstep Loans have hidden fees and costs
There are no hidden surprises with a Doorstep Loan. Your repayments and total amount repayable will be clearly set out in your agreement.
You won’t come across any unexpected costs or additional charges if your circumstances change as there are no hidden fees for late or missed payments.
Myth 4: Doorstep Loans aren’t good for your credit rating
Just like other kinds of borrowing, a Doorstep Loan can have either a positive or negative impact on your credit rating, depending on how well you manage it.
Your credit score can also be negatively affected if you have little or no credit history at all. Whilst at the outset having zero debt is a good thing, it doesn’t help your credit score if there is no record of how well you can handle debt.
Taking out a small form of credit such as a Doorstep Loan may help demonstrate your ability to pay your bills on time and be financially responsible. Remember, always repay your credit accounts as per the agreement, and on time each week/month.
Myth 5: Applying for a doorstep loan is complicated
Applying for a Doorstep Loan is a straightforward process. Many Doorstep Lenders have an online application facility allowing you to complete the necessary details before receiving a decision in principle, usually within 1-2 working days.
A credit check and an affordability assessment will be undertaken in line with guidelines and regulations.
Customers also have an opportunity to discuss their application and financial circumstances face to face in their own home with a dedicated representative. Many prefer this service as it enables them to fully manage their agreement in the comfort of their home, at a time that suits them.
About Firth Finance
At Firth Finance, we make it simple for you, with a quick and convenient online application form, and a decision in principle within 1-2 working days.
Our Doorstep Loans are competitive, with fixed rates of interest that will not change throughout the term of your loan.
One of our friendly representatives can visit you in your own home to process your application and collect your repayments, if required.
Did you know? Around 1.3 million adults in the UK do not have a bank account. As crazy as it sounds for those of us