Doorstep Loans vs. Other Loans
The United Kingdom is home to many types of loans, from short term unsecured loans to long term forms of borrowing that sometimes involve collateral. But what have become too popular over the years are loans meant for people with inferior credit, and doorstep loans are just a few of them. While they may all look the same, doorstep loans are different and more ideal in a number of ways.
Doorstep Loans vs. Payday Loans
Payday loans are probably the most popular type of bad credit lending found not just in the UK but also in the US. As the name suggests, this borrowing option involves taking out a loan against one’s salary, which should be repaid on the borrower’s next pay date in full. This gives the borrower only about two to four weeks to pay off the loan.
Both options are designed for short term borrowing, and both involve borrowing a small amount only. However, the main difference is that payday loans are required to be paid off in full, whereas doorstep loans have more flexible repayment options. A doorstep loan can be repaid in several, equal instalments, which may last between 14 and 52 weeks, thus giving the borrower more time to repay the debt based on their affordability.
The truth is, many find that the one-time repayment for a payday loan is simply difficult to meet, and thus there are many borrowers who end up missing their due dates because of this and incur expensive interests. This is less likely to happen with doorstep loans, because the borrower has complete control over the repayment terms.
Doorstep Loans vs. Logbook Loans
Logbook loans are another popular borrowing means for individuals with bad credit, which involves using the borrower’s vehicle as collateral against the debt. The borrower signs the bill of sale and transfers vehicle ownership to the lender while the loan is outstanding. The borrower can only retrieve the logbook once the loan is paid back in full.
When it comes to the amount to be borrowed, logbook loans definitely have higher borrowing limits because of the value contained in the vehicle. Typically, the borrower can borrow as much as 50% of the car’s worth. However, logbook loans are dangerous because of the risk of losing your vehicle. Logbook loan lenders are legally allowed to repossess the vehicle after the borrower misses payment, and it can be done even without a court order. With the typically large loan involved with logbook loans, it takes a longer time to pay off the loan, and there’s a greater possibility of defaulting on payments.
Both loans are pretty expensive, but there’s obviously a greater risk when securing a loan against your property. If you do not need a particularly large amount of money, a doorstep loan would be a more suitable, safer option.
Doorstep Loans vs. Guarantor Loans
As the term implies, guarantor loans are loans that require another person known as the “guarantor” in order for the borrower to obtain the financing that they need. The guarantor will co-sign the loan, with a promise to take full responsibility of the borrower’s actions. The guarantor should have good credit rating, and must show capacity to repay the loan if the borrower fails to do so.
Guarantor loans may seem safe and less expensive on the part of the borrower. However, it is not easy to convince someone to become your guarantor. There are strict processes to undergo, such as credit checks, just like with any other traditional loans. If you do not wish to bother someone else to take on the loan that you need or risk hurting your guarantor’s credit, then a guarantor loan is not for you. Perhaps, a doorstep loan is a beautiful option that you would want to consider.
There are many things to consider when taking out a loan such as affordability, speed, and convenience. We’ve exerted our best efforts to make sure that the doorstep loans we recommend to you meet all of your needs. To see what we have to offer, visit our homepage and receive your FREE quote!