In the past, the main ways in which we could obtain credit were to apply for a loan from our bank or building society, to apply for a credit card or offer some form of collateral to a third-party lender. But in 2019 this has changed. There are now tons of different companies all offering loans and each has their own unique and customer focused way of doing things.
Many of us have heard about payday loans and we understand the basic principle. You apply online and tend to have a brief series of questions asked by the lender before the loan is approved or denied. More often than not it’s approved due to how lenient payday loan companies are, but this quick an easy method doesn’t suit everyone.
Payday loan companies appeal because of what’s described above, even those with bad credit can obtain a loan without too much effort. This is often a lifeline to them, and they can even take advantage of this system time and time again to build up their credit rating. But some of us require a more personal touch.
First of all, lets confirm what a doorstep loan is not. The term doorstep when used in the context of debt and borrowing money is full of negative connotations. It instantly reminds us of getting a knock on the door from a bailiff. This is likely to send shivers down our spine and send us running in the opposite direction to anything labelled doorstep loan’. But the truth is they are nothing alike. Well the only similarities are they both involve loans and doorsteps. Doorstep loans are not connected to, or a form of bailiff. They are something else entirely.
Doorstep loans are similar to payday loans; however, all business is conducted face to face and on a personal level instead of through an app or website. Imagine a payday loan where the website sends a representative to your home to discuss the loan, how much you need, what for and how you want to pay it back, then give you the money there and then. Following this initial meeting the representative will come round again to collect the repayments at the customer’s convenience. It’s all very polite, civilised and friendly.
Believe it or not some customers prefer the personal touch that doorstep loans offer. They get many of the same benefits associated with payday loans, such as the leniency of the lender, but with the added comfort of explaining their situation, being listened to by a them too. It allows the customer and the lender to establish a more personal working relationship, trust and a mutual understanding.
This suits those who may be slightly older than the average payday loan customer but still wants a traditional service. Some people, of any age, just always choose to do business face to face. They may not trust websites or apps especially when it comes to important financial matters. The customer may have previously considered sitting down with their bank but realised they don’t require a particularly large amount of money. Banks and building societies sometimes only lend money if it reaches their minimum borrowing level, which for most is over £1000 pounds. Being forced to borrow more than they need is often what forces customers away from banks and into the arms of payday loan companies. In this situation the customer gets to benefit from the personal touch of a bank, but with a lower amount of money. Doorstep loans vary in amounts, ranging from a couple of hundred pounds to several thousand, depending on the loan and customer’s needs.
Unlike an app or a website, some customers find they have more room to negotiate with a doorstep loan. They may have a special circumstance or situation that can only be communicated by speaking to a human being. Sometimes even phoning a call centre isn’t enough to get some messages across. People don’t end up in a situation where they have bad credit on purpose, there is normally a reason behind this, and it may not be the customer’s fault. A doorstep loan allows the customer to explain the reasons for their credit history to the lender directly and this can open doors that may previously have remained shut.
So how do doorstep loans work once the customer and the representative of the lender have reached an agreement? Both parties then decide how long the agreement will last, the representative will then come back to collect the payment periodically, when this suits the customer. They are also rather flexible and can operate at evenings and weekends if the customer works full time 9-5 hours. This may be once a month, every month for the duration of the loans term but it depends on the individual loan.
The representative can never arrive unannounced and can only visit at pre-determined times as agreed by the customer. Both can stay in touch by telephone or email as required, each may need to rearrange their appointments depending on what’s going on. When meetings do happen, the representative usually comes in and sits with the customer for a brief period of time just to catch up and make sure everything is okay with the loan repayment terms. If not, they can make any required changes. This is a real positive and allows the loan to be more fluid than other forms of credit. The customer may need more time, need to borrow more money, or may be in a position to pay more than agreed back.
It’s important to point out that the customer is under no pressure to invite the representative in, if they just want to pass them the money at the doorstep then they can. But usually this isn’t the case and the customer is keen to catch up and discuss the terms. While the loans are called doorstep loans they should really be called something more accurate like 'sit down and have a cup of tea loans'.
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