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Representative Example: Loan Amount - £200 | Borrowed for 10 days | Interest: £9.89.
Total Repayment: £209.89 (Fixed) | Representative APR: 728.9%
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One of the worst parts of losing our jobs or becoming unemployed in general is the financial uncertainty that comes with it. We may have had our lives and finances in order but as soon as we lose our current and main income, this can throw our lives into disarray. Our bills still need paying regardless of our current employment status and even a month without work is enough to cause us a financial catastrophe. All of a sudden, the bills we’re used to paying every month become burdens as our direct debits fail one by one.
We may be frantically looking for work, but we’ve also got to find the time to call each of our utility companies and inform them of our situation. Reassuring them that this is just a blip and we’ll be back to normal soon. What’s even more frustrating is that now we’re not in full time employment it becomes much harder to get credit, and this may be the only time we really need it to get by. A lender may disapprove our loan simply because we are unemployed, and this rejection then shows on our credit file and can lead to further rejections! Each damages our credit file and before we know it, we’re in more trouble than we thought.
There are places we can turn in this situation; payday loans are one option. In fact, there are even unemployment loans that have been set up specifically for people in this situation. However, one method of obtaining credit may be much more suitable than a payday loan for those who are unemployed, that is the doorstep loan.
Usually, borrowers receive the amount within the day. In most cases, this can be as fast as within the hour. But the bank transfer times also plays a role.
A doorstep loan is very similar to a payday loan, but the arrangement is set up after a representative from their company visits your home and discusses the terms with you. Once you’ve both agreed to an amount, the loan term length and how you plan on paying it back the loan is then granted. Doorstep loans, like payday loans, are designed to help those in financial difficulty get back on their feet. The credit check before them is de-emphasised and the lenders tend to be much more accommodating for those who are unemployed or may suffer from bad credit.
During the initial meeting the customer has an opportunity to tell the customer service representative what they need and explain the reasons behind the loan. If you’ve lost your job or been made redundant then these may be important details to share. Especially if it wasn’t your fault, and if you’re actively looking for a new job.
Once the loan is approved the representative will then arrange a suitable time (usually once a month) to come round again and collect the payments. The lender and their representatives are forbidden from dropping by unannounced and all visits must be approved by the customer beforehand. Here the customer can make the payment or make changes to the arrangement if need be.
Not only is it easier to obtain a doorstep loan than it is a traditional loan, the loan itself is much more fluid and the lenders are very reasonable and attuned to what each customer needs as an individual. They are especially useful for those who are unemployed and looking for work as the lender can sit down with the customer when they arrive to collect a payment, then discuss how the job hunt is going. If the customer needs more time or needs to extend their loan, then themselves and the representative can arrange this together.
Doorstep loans offer a deeply personalised form of borrowing money, not just at the initial meeting but at every meeting. Unemployment is unpredictable and lots of customers find this system of borrowing easier than a traditional loan or a standard payday loan. They are able to sit down with a fellow human being and have their voices heard, the representatives are normally familiar with these situations and may be able to offer the customer some comfort and some useful tips on how to improve their current situation too.
The customer may be unemployed but that doesn’t mean they are struggling yet or have a bad credit rating. They may just be using a doorstep loan during this transition because they believe it’s the most sensible form of credit for them in that given moment. They may also appreciate that they are not forced to borrow more than they need. As many people know when you apply for a personal loan with a bank or elsewhere, there is normally a minimum borrowing limit’. This can sometimes be over £1000 and that may not be suitable to the customer. They may just have a couple of unpaid bills and need just £200 that they can pay back over four months. They may fully intend to be in full time employment again by this time, and chances are they will be.
Once you accept a loan from a doorstep loan company you are technically paying a debt back to when they come to your house to retrieve it. But doorstep loans have nothing to do with debt collection agencies or bailiffs and they are categorically a different thing entirely. Doorstep and loan being in the same sentence is enough to worry people and make them think of bailiffs knocking on someone’s door to collect an unpaid debt. This is nothing like that, the team members who represent doorstep loan companies are customer service advisers, they are exactly like the people you speak to when you ring a call centre.
Doorstep loans are certainly not for everyone, but those looking to take advantage of the ease and benefits offered by payday loan companies, but with the personal and individual service of a bank may find them rewarding. Those who are unemployed may find this service incredibly useful, allowing them to keep their bills and payments up to date in the short term, then pay the loan back when they’re inevitably back on their feet.
If you can make the payment before the due date, you may do so. However, this still depends on whether or not you've discussed this with your lender. To be safe, discuss these things before applying.
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