Doorstep Loans: The Solution to Loans Without a Bank Account?

Need quick cash, but don’t have a bank account? Wondering if doorstep loans might be the right alternative for you? Read on with Quick Loans Express to learn how to get cash loans at your door without a bank account.

Doorstep Loans

If you don’t have a bank account, loans to your door may be another workable alternative. Many people consider bank accounts as part and parcel of daily life, but for millions of people in the UK, this is not the case. Lots of people get rejected when they apply for regular bank accounts, as their poor credit scores can’t withstand the credit check. As a result, plenty of people are left without bank accounts and the conveniences of credit cards. That’s why many are seeking alternatives like cash loans to your door. However, it’s important to ensure these loans don’t cause more problems than they solve.

What are doorstep lenders?

Home credit, or doorstep lending as it is better known, is when a company brings the money that has been loaned to a person’s home and collects the repayments from the doorstep in weekly or fortnightly instalments, depending on the arrangement of the loan. These little loans are typically from £50 to £500 and have high rates of interest. These loans can be for various lengths of time, depending on the customer’s wishes. There are other kinds of doorstep lending companies who offer products such as ‘rent to own’ appliances and log-book loans.

What rules do doorstep lenders follow?

The FCA must regulate all home credit lenders for them to operate. Many who approach customers in their homes are not. By law, doorstep lenders require written permission to visit a customer and are not allowed to call uninvited. The same rules apply if an agent is collecting repayments, they are not allowed to offer loans. If the customer needs another loan, they must make a separate appointment to discuss the borrowing terms to give them time to consider their options. During a further visit, a customer is allowed to ask an agent to leave at any time.

The FCA regulates doorstep loan companies too. Still, when it comes to doorstep loans vs payday loans, the regulations for payday loan lenders have cleaned up the industry and proved successful. However, they have not been extended to cover other types of high-cost credit, like doorstep loans. (Although, there are new regulations for the rent to own agreements.) These companies operate in the poorest regions of the country. There, most of their users have little or no credit history. Others are unemployed, suffering from family breakups or ill health. The Citizen’s Advice Bureau has asked the FCA to extend the payday loan regulation to similar kinds of high-cost credit. This will mean that people who can no longer get payday loans will be protected from other forms of credit.

How else do doorstep home credit loan companies and payday lender compare?

• Both of these types of loan companies can charge similar rates from 1,000% up to 1,500% APR.
• Both types of lender; doorstep and payday lenders will have good deals

The loans market is very competitive so you can obtain better deals from both kinds of lenders. Payday lenders work within the new regulations and follow voluntary conduct codes in the form of the good practice charter. Most payday lenders do follow these codes of conduct to be competitive. They also perform credit checks on their customers to ensure that their customers can afford the product.

Doorstep lenders do not have to follow any conduct codes and can lend at their own discretion. In a report from the Citizen’s Advice at the beginning of the year to the FCA, they reported cases of intimidating behaviour by collection agents. A third of customers had multiple loans and felt hassled for repayments. This is a big problem with these kind of loan companies who find themselves with employees using intimidating behaviour, to collect repayments that they earn commission on, without their knowledge. Agents become very friendly with their customers and can prey on vulnerable people who already in serious debt by plying them with more debt.

Why Do Doorstep Loans have such High Interest Rates?

Doorstep loans have very high rates of interest. This is because these loans are often provided to individuals with no bank account and a bad credit score, so they can be costly. A conventional unsecured loan from a bank would cost, on average, approximately 7 per cent APR. Doorstep loans UK cost significantly more. A fast search online finds doorstep bad credit loans available for an average of 236% APR– that’s almost 34 times higher!

Of course, these loans are generally not available for long-term repayments, so these high APR’s don’t have time to rack up significant costs. Door to door loans are designed to be short term loans for the borrower to repay over a couple of weeks. As long as you can pay promptly, the total amount payable shouldn’t be overly excessive.

Before taking out a loan make sure you’re aware of the amount of time it’s for and that you’ve got a strategy in place to settle the balance. If you are hoping to get paid at the end of the week, but you have invoices which can’t wait, doorstep loans may be an inexpensive option. Just make sure you repay as soon as possible to avoid accumulating excessive interest.

Another drawback of same day loans to your door is their restricted borrowing capacity. These are strictly small-scale lending facilities of a couple of hundred pounds at a time and are meant for you to repay quickly. That might be perfect if you’re seeking a small loans alternative, but they won’t be very helpful if you need a larger amount or something more long term.

So When Should You Use Cash Loans to your Door?

Despite all these downsides, doorstep loans do have their uses, the most significant being the speed. When you apply for loans to your door same day, there’s no need to wait days or weeks to get approved like you would with a bank. All you need to do is apply online using a business like Provident Home Credit and then wait for the money to arrive.

Additionally, repayment choices are often somewhat flexible, so you can work out a repayment plan that fits your budget.

Still Not Satisfied with Your Options?

Although there are many alternatives if you need a loan without a bank account, you might be feeling limited. You may want to look into opening a basic bank account which is designed for people with bad credit and fairly easy to get approved for. Basic accounts don’t charge fees, and most will even provide you with a debit card to make payments more convenient. Having an account can open up more options for you, and allow you to circumvent personal loans for bad credit without a bank account.

A Fraudulent Home Credit Incident

A 55-year-old woman from Dundee was found guilty of creating fake loan agreements for customers with poor credit ratings. Without their consent, she used the names and addresses of people she knew. Jacqueline Mulligan was able to get £15,000 worth of loans approved by her employers. Her employers, Shopachek Financial Services, offer short-term loans. These are repaid weekly when their agent visits borrowers’ homes. They became suspicious when they noticed that she had issued a lot of loans to the same customers.

In her defence, Mrs Mulligan said she’d only received a small commission for these fraudulent loans. Only her personal circumstances saved her from a prison sentence. Bearing this story in mind, isn’t it time that home credit lending, or doorstep lending, was subject to the same vigorous regulation as pay day loans online?

In this article, we look at the size of the home credit market and the typical borrower. We consider the use of agents like Mrs Mulligan. Have there have been too many complaints about them? Finally, we see what the FCA has to say about home credit and if there are any plans to implement changes, like they have done with direct loans.

How big is the Home Credit Market in the UK?

As a result of research published in July 2017, the FCA found that 1.6 million Britons, or 3.1% of the adult population, have outstanding debts to doorstep lenders. The average size of their debt had risen from £710 to £770 since 2015. Citizens Advice revealed that in 2015 it had helped 23,000 people with unmanageable doorstep debts. Of those people, a third had taken out home credit more than once.

Doorstep lenders make use of agents who go around their allocated area. Agents help people fill in their loan applications and collect their customers weekly repayments. The fact that agents visit people in their homes and often build up a relationship with their customers has both a positive and a negative side. The main benefit is that if people are struggling in a particular week because of unexpected expenses, they can explain to the agent face-to-face. Putting a human face to someone’s troubles often means that these people are treated more sympathetically than by someone hearing the same story over the phone.

On the other hand, there are worries that a relationship with the agent means that the customer may depend on them too heavily. In particular when it comes to making decisions regarding their finances. In this way, they may be encouraged to roll-over the debt, adding to how much they’ll end up repaying. Citizens Advice found that the typical customer with a home loan has little or no credit history. They may have faced periods of unemployment, family break-ups and ill health.

Customer Satisfaction with Home Credit Loan Agents

Apart from the undue influence they may exert on their customers, there have been complaints about the behaviour of some home credit agents. One concerns the fact that they cold-call potential customers. They actively encourage them to take out loans that they don’t really need. The other problem regards their debt collection tactics. Agents for doorstep lenders receive a commission according to how much money they collect, rather than how many loans they grant. Therefore, if customers don’t make their regular repayments, it ultimately affects how much they earn. Citizens Advice announced in February 2017 that they had received complaints from people about these agents using intimidating behaviour to get their repayments. These stories sounded more like loan sharks than respected lenders.

FCA Plans to Make Home Credit Loans Safer

The FCA’s final report into short-term high-cost credit facilities like home credit was publihsed in Spring 2018.

The FCA want to examine the relationship between agents and customers. Although doorstep lenders say that it isn’t in their agents’ best interests to give loans to customers who can’t repay, do unscrupulous agents care if they ever repay? If they can keep receiving repayments over longer and longer periods of time, they’ll end up earning more in commission. As a result of concern that the agent-customer relationship could lead to increased financial distress, the FCA is thinking of possible ways to protect borrowers. The FCA announced that in spring changes to the way doorstep refinance loans. Lenders are no longer allowed to offer new loans or refinance at collection unless specifically requested from the customer. It is estimated to save £34 million for consumers a year.

The question of staff incentives, remuneration and performance, is another issue that the FCA address. They believe that home lenders should manage risks to consumers from how they reward their sales and collection staff. The key to improving this aspect of the service given, both before and after a loan is awarded, is via thorough staff training. This would also address the issue of acceptable collection tactics, regardless of the sort of short-term loan.

So, is Home Credit Safe?

Companies which give home credit loans depend on a great deal on the character and behaviour of their agents. This more than anything affects how the wider community perceives their company.

This agent-customer relationship can be positive because it enables customers to confide in a familiar figure when they have financial problems. However, people can abuse the resulting relationship, as we’ve seen in the example of Ms Mulligan or in cases where agents use intimidation to collect outstanding loan repayments. The key to making doorstep lending safer is to make sure that the company adequately trains agents. Also, their performance should be regularly monitored to ensure that they’re abiding by their company’s code of practice.

Conclusion – Loans Without a Bank Account

If you need a loan without a bank account, then loans to your door may work for you depending on your situation. You can qualify for doorstep loans even with a poor credit rating, and they may be a good alternative if you need payday loans no bank account. When considering different suppliers, make sure to choose a doorstep lender that is authorised and regulated by the Financial Conduct Authority since many on the market are not.

Although doorstep loans with no credit checks can be tempting if you have exceptionally bad credit, they are generally unsafe as they are not FCA authorised. Spend some time researching to make sure you get the best deal. Regardless of what occurs, never use a loan to fund something extra you are not sure you can afford to repay.