A recent report has revealed that doorstep lenders are homing in on the UKs most financially deprived areas in an attempt to win customers who are being declined credit elsewhere.
Doorstep lending has been around since the early nineties, and although business died down for some time; as high street banks began to cater for bad credit customers the credit crunch has left the majority of these customers in a state of desperation.
As the name suggests, doorstep lending involves lending firms going direct to consumer's doors where they often offer small cash sums, over short periods of time. The loan is then repaid on a weekly basis to a local agent who calls at the borrower's home.
This considerable pressure, coupled with the vastly inflated interest rates has resulted in doorstep lending practices being heavily criticized by consumer groups over the years. Doorstep lenders defend their high interest rates, which can be as steep as 60% for a £200 loan by pointing out the high risk they are taking by loaning to such bad credit customers.
Although consumer groups still don't consider this enough justification for their high pressure practices and interest rates, they have withheld from pushing for a ban as they know the business would be driven underground to loan sharks.
Consumers are being urged not succumb to the "quick and easy" cash temptation that doorstep lenders offer. Instead of sacrificing long term financial stability for a few days of relief, consumers should ensure they have had a thorough look at the current market.
Obviously, finding credit on today's stringent market is going to be difficult; this doesn't mean it's impossible though. There are still a handful of lenders that cater specifically for bad credit applicants, and although the interest rates may be steep they won't be anywhere near as high or risky as doorstep loans.
As mentioned finding bad credit personal loans will be more difficult than it has been in the past, but there are still plenty of these loans available. If you are already struggling with repayments on any loans then it's advised you consult an IFA.
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