Everything You Need to Know About Home Credit

Home credit involves small scale loans where the lender calls you up at home for repayment. The interest rates can be higher than some other loans, but they offer numerous benefits that are worth considering. The more you learn about this borrowing option, the easier it will be to make the right choice. This is an option that anyone who needs a smaller loan should learn about. These loans have become very popular throughout the UK for a number of reasons.

How it Works

With a home credit or doorstep loan, the lender must get written authorization from you in order to visit your home. Each individual visit will require this sort of formal permission. If the lender ever offers you a separate loan, you have the right to refuse. You should never make a decision on a loan because you feel pressured. Once you have signed a contract with the lender, they do have the right to call or visit you at home to collect repayment of the loan.

Borrow Amounts

You can typically borrow anywhere from £50 to £500 with a doorstep loan. The loan periods are fairly short, ranging from two weeks to a couple months. The amount of time that you get to pay back the loan will depend on the amount you borrow and the lender.

Finding the right Lender

One of the most important things to do when looking for a doorstep loan is to find a lender that is fully authorised. Make sure that the lender you borrow from is authorised by the FCA or Financial Conduct Authority, so you know they are legitimate. The last thing you want is to end up borrowing from a shady lender that isn’t on the up and up, so to speak. The more research you do into your lender options, the easier it will be to avoid getting ripped off or scammed.

Paying Back Your Loan

You will most likely be required to repay the money you owe on your doorstep loan on a weekly basis. An agent will call you at home for your payments. You may be able to have your payments taken out your bank account automatically on the due dates. This is by far the best option if you don’t want to accidentally miss a payment.

If you think that you might not be able to pay back your loan on time, contact the lender right away. There is a good chance that your lender will be willing to work with you to a certain extent. If you are having money problems for any reason, you don’t simply want to avoid the lender’s calls. They will just keep calling until they get their money.

Most lenders will allow you to pay back your doorstep loan early if you are able to. It’s always a good idea to make the largest payments you can to reduce the amount of interest you pay on the loan. This is something else that you should ask about before choosing a certain lender to borrow from.

Understanding the Contract

It is crucial that you read through the loan contract before signing. The worst thing you can do is to get any type of loan without carefully reading through the entire document. The details that the contract is made up of are very important. If something doesn’t look right to you, it is important that you mention it to the lender.

Penalties and Fees

One of the great things about doorstep loans is that most lenders don’t charge borrowers an additional fee if they are late on a payment. Some lenders do charge certain fees, and it is something you need to ask about upfront. You don’t want to end up getting surprised by fees that you weren’t expecting at any point.

Before You Get the Loan

There are certain things that you should do before taking out a doorstep loan, including looking at your other borrowing options. It’s also important to determine whether or not you will be able to pay back the loan on time. While the lender is going to look at your finances as well, this is still something to consider. Take a close look at your credit to see what it is like before applying. People with low credit scores can still get these loans, but you should be aware of what yours is like at the moment.

Should I take out a Doorstep Loan?

A doorstep loan can be very useful to people who need to borrow smaller amounts as quickly as possible. You do need to keep in mind that your interest rate will likely be fairly high. Take as much time as you need to shop around so you can find a reputable lender that can give you a reasonable interest rate.

What Term Should you get for your Loan?

Different types of lending have different terms and it is worth considering which will be the best for you. The term means how long you have to repay the loan. A mortgage is likely to be between twenty and thirty years and a payday loan a few weeks, so there can be a huge difference. Often the longer it takes to repay a loan, the more expensive it will be because the interest has been adding up for much longer.

Choosing the cheapest term is not always the best option though. You would not be able to repay a mortgage in a few weeks, for example! So you need to think practically about what you can afford. It can be best to calculate how much you can afford in repayments and then work from there. If you can afford a lot, then you may be able to repay the loan over a shorter term than if you cannot afford much. Of course, this will also depend on the amount that you are borrowing.

Some loans, such as a credit card, have a flexible term. These may seem the most convenient as you only have to pay back a small amount each month and can choose when you repay what you have borrowed. However, this is expensive and risky. The longer you hold a loan, the dearer it is and with no pressure to pay it back, you will end up having the loan for a very long time. It can almost be too easy to forget about it and just keep paying the interest month after month and end up paying a lot of money for the loan.

It is wise to think about the future as well when you are thinking about the term that you want. If you have a long term loan, then you may find that in the future it gets more difficult to pay. It could be that interest rates go up, your costs go up perhaps due to an expanding family or you may have less money to be able to afford it for some reason. However, the future may be better, perhaps interest rates may fall, your income may go up and your expenses may go down. It is all very unpredictable and so you need to make sure that you are prepared for anything that might happen in the future. Make sure that you feel confident that you will be able to make the repayments for the whole term of the loan.

As it is usually cheaper, it can be tempting to just g for a short term loan. However, you may find that it is much harder to come up with the money required to repay it. It is really important that you do make the necessary repayments on time. If you do not do this then there are likely to be fees and these could be very high. Some types of loans will charge per day that the repayment is not made and therefore the debt can soon increase massively. Although there is some UK government regulation on making sure that the debts do not go too high they can still increase well beyond a person’s means. It can therefore be sensible to take out a more expensive loan which has a longer term to make sure that you will be able to make the repayments.

There is a lot to think about and this is why many people use a financial advisor to help them. If you wanted the loan from your bank then they may have an advisor that could help you. If you were not sure where to borrow the money from then you could pay a financial advisor to help you. Not only would they be able to help you find the right loan type for you, they should be able to help you find the best specific loan so that you can find one the is the easiest to manage and the best price.

Therefore the term is a really important factor. It can have a huge effect on the price of a loan but also on how easy it is to repay. You need to ideally find a balance between the cost by making the term short, but also ensure that you can afford each payment, which may mean making it dearer. However, a missed payment will be very expensive and it is something which you will want to avoid if you can.

When to get a Short Term Loan

If you are considering getting a short term loan, it is worth making sure that it is the right time for you to do so. All loans can be risky and it is important, especially with expensive short term loans, that you are taking the risk at the right time.

Short term loans are designed for people to use in an emergency. They have to be paid back very quickly and usually only lend small amounts of money. They would normally be used to pay a bill or cover some expenses which have to be paid urgently. Therefore they should only be taken if the money is needed very quickly and paying for something essential.

In an emergency it can be tempting to make a quick decision. It is easy to be in a panic and quickly borrow money without really making sure that it is the best thing for you to do at the time. However, it is worth trying to step back and think things through. This can be really hard as we can act irrationally when we are very stressed. It can be wise to discuss it with a friend, family member or debt counsellor to make sure that you are doing the best thing.

Most short term loans can be organised very quickly. They may even be able to get you money within a few hours and so if you need money fast they can be the best option. However, if you have an overdraft facility or a credit card, then these could also be options for you which will be even quicker to organise and could be cheaper, if they are paid back quickly.

A short term loan is very expensive and if you do not pay it back when required it is even more expensive. This means that you need to make sure that you will definitely be able to pay it back when needed. You will be given a repayment date and you should make sure that you will have enough money to repay it when you need to or else you could find that you will end up with a huge amount of debt.

Short term loans do not always do credit checks. This means that anyone with a poor credit rating may find that they are the only option available to them if they want to borrow some money. However, they should not be tempted to borrow if they do not desperately need the money. A loan like this is expensive and you will have to repay it quickly including the interest and charges and this can be difficult for some people to manage. As said before, the fees for not repaying on time are very high and so if there is any doubt that it will not be paid back, then it should not be taken out.

So because a short term loan is so expensive, it should only be used in an emergency and after all other options have been considered. Even if you have a bad credit record it is worth seeing if you can get a cheaper loan elsewhere first, you never know what you might be offered. If you need money quickly it again, could seem like a good option, but do check if there are cheaper alternatives. Most importantly make sure that you really do need the loan. If you owe money to someone, then call them and see whether you can delay paying it. Make sure that you really need the money and that you cannot possibly manage without it. Even if you must have it, see whether you can raise some extra money, perhaps doing some freelance work, overtime or getting and advance on your pay. You may be able to sell things you own or ask friends and family to help out so that you do not need to get into expensive debt. Only after you have eliminated every other option and you know for sure that you must have the money, should you go ahead with this sort of loan. Even then you must be confident that you will be able to repay it when required or else you could end up in further debt and in a much worse mess than you started in.

The Risks of a Logbook loan

A logbook loan is a loan taken out using your car as collateral. It means that you can borrow money even if you do not have a perfect credit record and so it can be tempting to do. However, like all loans, there are risks associated with a logbook loan and it is wise to be aware of them before applying.

A logbook loan is a loan where you use your car as collateral. This means that you can borrow money depending on the value of your car. So the company will value your car, take off the cost of any finance you already owe on it and can offer to lend you the difference. However, they will take possession of the ownership documents of your car until the loan is paid off. This means that if you miss a repayment, they can sell the car and they will then take the money which is theirs and give you the rest.

Therefore the most obvious risk of the logbook loan is losing your car. In some cases this will be more of a problem than others. If you need your car to get to work, for example and there is no other way of getting there, losing your car could mean losing your job. This is a huge risk. However, if you only use your car for pleasure, have another car in the family and could manage without it, then perhaps it is not such a big risk to you.

It is important to also think about other risks as well. If you take out any loan you will have repayments to make. These will be expected to be made on a monthly basis as you might expect. However, you need to consider whether you will have enough money to be able to afford to make these repayments. It is well worth getting some paper and working out what you earn and spend each month on average. Think about larger costs which may not be regular like birthdays, insurance renewals, home repairs, car services etc and when you are likely to have to pay for those as well. Then consider how much extra you will need to find each month to cover the repayments on the loan and whether you will be able to cope.

You need to also consider what might happen if you want to borrow even more money. Having a loan will not only change your credit record but it will also affect your means of covering repayments on a loan. If you want a mortgage or any others ort of loan, you may find that you will be turned down as a result of having a logbook loan. This could mean that you will have to do without things and may even be worse off financially compared to how you might do if you do not have a loan.

Having any sort of loan can be stressful. If you are struggling to make the repayments or to manage on the money that you have left after the repayments it is not much fun. Some people also feel stressed about having a debt hanging over their head and if you have a debt for a long time, this stress can really add up and can even lead to illness.

So although all loans have risks, there are additional ones associated with a logbook loan. As your car is a collateral on the loan, you may lose the car if you cannot make the repayments. If you need your car for work then you could even end up losing your job if you cannot get there and so the risk can be very high. So you need to think hard about whether you can afford to risk your car like that. Consider all of the things that you use it for and how you would manage if you did not have it. You need to weigh up this with the advantages of having the money from the loan. What will you be spending it on and how important is it to you. Weigh up both sides and think about whether you still think that it will be worth it.