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The term 'doorstep loan' refers to a personal unsecured loan that is delivered literally to your doorstep by an agent, who will also collect your repayments in the same way. The interest rates applied to these loans will generally be higher than that for other types of loans, primarily due to the shorter repayment period and the increased risk to the lender. Doorstep cash loans tend to be targeted at borrowers with lower credit ratings or with lower income, as loans of this nature are often made available to applicants that would not otherwise be offered credit. Doorstep loans range in value from around £50 to £500 and are usually taken out to pay for one-off necessary purchases or to help bridge a financial gap in difficult times.
Despite their perceived convenience, the high cost of borrowing through doorstep loans can often lead to customers finding themselves further in debt as a result. The high interest rate and frequent repayment requirements mean that if a customer gets into difficulty repaying, this can quickly escalate into a 'vicious circle' of debt where more money has to be borrowed at high rates in order to meet the repayments of the initial amount. It is possible to avoid this snowball effect with a bit of careful planning and some good, impartial financial advice.
For those looking to get out of debt from doorstep loans there are a number of options available, and the first step is always to research and consider these options carefully to decide which path is right for you. Seeking advice from an impartial adviser is a good idea and there are a number of places you can go for this advice. You might want to try your local Citizens' Advice Bureau as a first port of call, as they will usually be able to provide some initial guidance and direct you elsewhere if necessary.
One option you might consider in your strategy to escape the debt spiral of doorstep loans is some form of debt consolidation. This term refers to taking out one single loan to pay off all your existing loans and consolidating your repayments into one single monthly repayment. If you are considering this option it is important to carefully compare a wide variety of products to be sure you will not end up paying more in the long run. While it is sometimes said that you should never borrow to get out of debt, this is somewhat simplistic. If you are able to borrow more cheaply than your current loans then you will find that you could in fact be better off as more of your repayments will go towards repaying debt rather than simply servicing the interest.
One of the main reasons that so many people in the UK currently find themselves in debt from doorstep loans is because no price comparisons with other providers are available. The good news is that the Competition Commission has ruled that doorstep lenders must become more transparent to allow customers to make more informed decisions about their finances. In the meantime, the main thing to remember when trying to solve any problem debt is that however daunting it may seem now, the fact that you are willing to investigate options to resolve it means you are already a big part of the way towards getting your debts under control.
