Doorstep loans

They're one of the most controversial forms of high-cost credit around, but do doorstep loans have any redeeming features?

Late repayments can cause you serious money problems. See our debt help guides.

Doorstep loans have a poor reputation. So what are they? How do they work? What are their pros and cons? And perhaps more importantly – if they’re best avoided, what are the alternatives?

What is a doorstep loan?

A doorstep loan is a short term, unsecured personal loan where each transaction – from application, through issuing of funds to loan repayment – takes place on your doorstep. To be clear, “on your doorstep” means right at the door of your residence, not in a nearby high street or just up the road.

How do they work?

Most doorstep loan companies let borrowers begin the application process online, but will want to meet face-to-face before – or at least at the point of – issuing funds. Loans are typically for amounts between £200 and £1,000 (but don’t expect to be approved for a £1,000 loan the first time you use a company), take a few days to be issued and are normally repaid in weekly instalments.

Typically, the interest rates for these loans are set at a fixed rate (providing clear knowledge of the total cost of the loan in advance), but they tend to be quite high. An agent will visit you to collect the repayments at an agreed time each week until the original sum, plus interest due, has been repaid. Home visits are often sub-contracted to self-employed agents who live in the area.

What to look out for with doorstep loans

Crucially, doorstep loans haven’t been reined in by the financial watchdog, the Financial Conduct Authority (FCA), in the way that “payday” loans have.

In response to widespread concerns around high-cost, short-term credit, the FCA introduced a raft of measures to protect borrowers, such as a cap on the amount of interest that can be charged by lenders each day, and overall. For some reason however, what the FCA terms “home credit” (which covers doorstep loans) was specifically exempted from these tighter rules.

As a result, borrowers that opt for a doorstep loan can still face eye-wateringly high interest rates and loans that can be rolled-over into new, larger loans multiple times, allowing debt to snowball.

Do loans at home do a credit check?

Not all home credit lenders will perform a credit check on you when they offer you a doorstep loan, but many will still do a “hard” credit check when you apply, which will show up on your credit file.

However, doorstep loans are one of a number of financial products that typically serve people with poor credit, and your eligibility may be more a question of what you can afford to borrow, as opposed to how good your credit score is.

While doorstep loans may seem like a convenient option if you have bad credit, it’s better to check your eligibility for other types of credit before committing to a doorstep loan.

Tom Stelzer, personal finance expert

What are the alternatives?

Doorstep loans should only be considered as a last resort. Before you apply for one, make sure you’ve considered other options. Is the expenditure you’re planning urgent and essential? If you’re struggling to pay a bill for example, you could try talking to your utility provider about a payment plan.

There’s a wealth of free information on alternatives at the government’s moneyhelper.org.uk, plus sound advice on managing debt generally.

A couple of options that you might want to consider are listed below. It’s crucial to note however, that this is not an exhaustive list, and focuses more on financial products available to borrowers than on options like borrowing from friends/family or selling off assets. We have a guide on alternatives to payday loans, which is equally relevant for doorstep loans.

  • Credit builder credit cards. These credit cards have lower credit limits and higher interest rates than standard credit cards, but come with less-demanding eligibility criteria and are designed to help build/rebuild a positive credit history. In some cases, credit limits can be reviewed in as little as four months. This option is likely to take a little longer to arrange, but could provide a more practical long-term strategy.
  • Guarantor loans. With a guarantor loan, a friend or relative of the borrower promises to repay the loan in the event that the borrower doesn’t. The guarantor will normally need to have a good credit score and a history of repaying debts on time.
  • Logbook loans. Logbook loans must be secured against a vehicle, so if you fail to repay, you’ll lose your car. However, because the lender has a form of security, they are more likely to consider applications from borrowers with bad credit, and to lend larger sums.

Check before you borrow

If you do decide to take out a loan, whether from a doorstep loan company, an online payday lender, a high street money shop or elsewhere, make sure to check that the lender is authorised and regulated by the Financial Conduct Authority (FCA). It only takes a minute to search the register of authorised companies.

Bottom line

Doorstep loans may be a convenient form of borrowing, but can also be very expensive and lack the same level of regulation as other recognised types of loan. Before taking out a doorstep loan, it’s important to check their authorisation, and make sure you’ve also compared your other borrowing options to make sure you can’t find a better deal elsewhere.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables is provided by Defaqto. In other cases, Finder has sourced data directly from providers.
Chris Lilly's headshot
Written by

Head of publishing

Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio

Chris's expertise
Chris has written 538 Finder guides across topics including:
  • Loans & credit cards
  • Building credit
  • Financial health
  • Share trading

More guides on Finder

  • Personal loans for good credit: Rates from 5.8%

    Find the most competitive loan rates in the UK for high credit scores.

  • Loans for students

    Most students have to operate on a shoestring budget, but when a financial shortfall hits, thankfully there are a number of options to consider.

  • Compare personal loans for fair credit scores

    If your credit score isn’t spotless, you still have options when it comes to borrowing.

  • Compare bad credit, no guarantor loans

    Looking to borrow money without using a guarantor? It’s possible, even if you have a bad credit score

  • Season ticket loans

    With ever-rising public transport costs, it’s more important than ever to find the cheapest way to fund your commute. Here’s how to weigh up the options and find what works for you.

  • Loans for gaming laptops

    Want to be able to game whenever you go, but not sure you can afford to splash the cash on a gaming laptop? From in-store finance to personal loans, check out our guide to finding the right loan for you.

  • Creation Finance personal loans

    Creation Financial Services offers fixed-rate personal loans of £1,000-£25,000 over 1-5 years with no hidden fees. Find out all the key features of these loans and compare live rates in our in-depth review.

  • Bad credit personal loans

    Got a patchy credit record? All’s not lost – there are lenders who will consider you for a personal loan. Find out which ones, learn how to compare them and read about alternative options.

  • Sainsbury’s loans calculator and review

    Whether you’re planning on some home improvements, replacing your car or simply getting your finances in order, Sainsbury’s offers fixed rate personal loans of up to £25,000 to Nectar card holders. Fast, easy comparison with a range of lenders.

  • Post Office loans calculator and review

    Compare Post Office fixed-rate personal loans against products from a range of UK lenders. Apply online and secure a competitive rate.

Go to site