If you’re considering a home credit loan, sometimes known as a doorstep loan, your finances might not be in the best place right now. If your bank just keeps on saying no, and you’re your low on options, a home credit loan can be tempting.
These loan providers make it easy. You apply online and then bring cash to your door. You also make your weekly cash repayments face to face. There aren’t many restrictions on who can apply. Even if you have a poor credit rating you’re likely to be accepted. In return, you’re like to be charged eye watering interest rates.
What will you repay on a home credit loan?
If you’re taking out a loan it’s easy to just think about the here and now. Receiving a loan might be the difference between having food on the table, or providing for your children. But if you can, try and take a long term view.
The image shows that if you borrowed £1,000 over 2 years, you’d repay £1,902. That’s at a rate of 100% APR. But with a home credit loan the APR can sometimes be more than 1000%. This can leave you living under serious financial hardship.
What other options are available?
There are a number of debt solutions available in the UK. Although they don’t offer you immediate cash, if you find the right solution for your circumstances, it can be an effective way to get debt free.
Here’s a little bit about the debt solutions available.
Debt Management Plans - with a Debt Management Plan you’ll repay your lenders in full, only at a rate that’s more affordable for you.
Individual Voluntary Arrangement - with an IVA you’ll make repayments for a set amount of time. When the IVA successfully completes, any debts you haven’t repaid are written off.
Debt Relief Orders - with a DRO you won’t need to make any more repayments to your lenders; for this reason the qualifying criteria is very strict.
Bankruptcy - with bankruptcy your debts are written off in 12 months.
Each debt solution will impact your credit. Before starting any debt solution you should seek them help of a debt professional.