If you don’t have a bank account, cash to your door loans can provide a viable alternative. But make sure they don’t cause more problems than they solve.
Most people consider bank accounts as being part and parcel of everyday life, but for millions of people that’s not the case. If you’re one of them getting access to basic financial services can sometimes feel impossible. So this is why many people are turning to cash to your door alternatives.
What are they?
Cash to your door, or doorstep, loans do more or less what the name implies. They are small loans of £100-£1000 which can arrive to you in cash even if you do not have a bank account. For people living on low incomes they can feel like a crucial way to make it through the month. But as always with these facilities there are problems.
The most obvious is the interest rate. Because these are offered to people without a bank account and who might have a poor credit rating, they are expensive. A conventional unsecured loan from a bank would cost an average of about 7% APR. Cash to door loans cost more – much more. A quick search on the internet finds home finance and doorstep loans on offer for around 200% or 275% usually.
Of course, that APR may not apply. These loans are to be short term – over the course of a few weeks. As long as you can pay promptly the cost should not be too excessive. Before you take out a loan make sure you know how long it will be for and that you have a plan in place to repay the balance.
If you’re expecting to get paid at the end of the week, but have bills which can’t wait, doorstep loans can be inexpensive. As long as you pay them off as soon as possible.
The other drawback is a limited borrowing capacity. These are strictly small-scale lending facilities of a few hundred pounds at a time. They are not a good idea if you’re looking for something larger or longer term.
So when should you use them?
For all these down sides they do have their uses. The biggest being speed. There’s no need to wait days or weeks as you would with a loan from a bank. All you have to do is apply online with a company such as Provident Home Credit and wait for the money to arrive.
Repayment options are flexible which means you can choose a repayment plan you can afford and requirements are much lower. You can access these loans even if you do not have a bank account and if your credit history is poor. They are also much cheaper than payday loans so although the interest rate is extremely high it’s not in the high 1,000% APR plus territory.
In essence, whether these work for you will depend on your circumstances, your choice of provider and how you use the loan. Spend time shopping around to find the best deal. And, no matter what happens, never make the mistake of using a loan to finance something you’re not sure you can afford.