An emergency can catch you on the wrong foot at any moment, and therefore financial experts suggest that you stow away some money for a rainy day. If you have a considerable size of an emergency corpus, you can dip into it to tide over, a safer and better way than borrowing.
However, at the same time, financial experts also believe that having enough savings to meet unexpected expenses is not viable for everyone because some could be on low wages and others could be on a shoestring.
Well, regardless of your income, you should have some savings to cushion the blow of unforeseen expenses – after all, something is better than nothing. The money you need on top of what you have in your savings can be borrowed from a direct lender.
Various types of small loans help you tide over during financial emergencies, but you need to check which one suits your needs best. Each loan has different features. Some of them might be more expensive, so if you are looking for an affordable funding source, doorstep loans can come in handy.
How doorstep loans are a trouble-free way to lend money
Doorstep loans are quick cash loans online in Ireland. These small loans are ideal for funding unforeseen expenses. They are named after the doorstep as the money is lent at your doorstep. The doorstep service was started for the unemployed, the retired and the disabled people.
The aim was to provide more convenience to borrowers, especially those who want face-to-face counselling at the time of borrowing. The application procedure for these loans is the same as any other loan. You just need to put in the loan application online.
Once you submit it, one of the representatives of a lender will call you to appoint a meeting at your doorstep to discuss credit requirements. After perusing your income statement and credit rating, the lender will hand you money on the spot.
As agreed, you will be responsible for making the payments. The representative will call on you to collect the money on the due date.
A trouble-free way can cost you more money
Doorstep loans are a type of payday loan. These loans are small emergency loans to be paid off in a lump sum. The repayment length of these loans is generally not more than a month. In rare cases, it stretches over months.
A lender will make a lending decision just based on your income statement. As far as it is about your credit rating, they will run a soft credit check that does not leave search footprints on your credit report. If you already have a poor credit score, you will be regarded as a risky borrower and end up with high-interest rates.
Since a representative will visit your doorstep to hand in or collect money, additional fees will be imposed. This can quickly add up the cost of the debt. It is always recommended that you avail yourself of doorstep service only when it is the last resort.
The APR of doorstep loans like Provident in Ireland can go up to 1500%, making these loans exorbitant. You should carefully analyze your repaying capacity before taking out these loans.
Can you get doorstep loans at lower interest rates?
Doorstep loans are quite expensive, but there is a way to secure a deal with lower interest rates. Here are some of the tips you should follow:
- Avoid no credit check loans
There are some lenders that offer doorstep loans with no credit check. This kind of service is aimed at borrowers with very bad credit ratings who do not want to lose their points with another hard inquiry.
As a lender cannot have an idea about your past payment behavior’s, they will be skeptical about your repaying capacity. As a result, they will charge a higher interest rate. You should instead apply for loans that involve a credit check.
Most of the borrowers think that a bad credit rating will always result in rejection, but it is not so. If late payment marks are old, they will not affect your ability to borrow money at affordable interest rates. Some doorstep lenders run a soft credit check to protect your credit score.
This is also a good way to let your lender know about your payment history without losing your credit points.
- Choose an instalment repayment plan
Some of the doorstep lenders take money back in a lump sum on the due date. It can be difficult for you to do so. Chances are you fall short of cash again and then reborrow money. This may throw you into an endless cycle of debt.
You should choose a lender that accepts money in instalments. Depending on the amount of money, you will pay down the debt in either weekly or monthly instalments. This makes the debt more affordable because you can set a budget to avoid falling behind on payments.
- Disclose your income and spending details correctly
Giving false information about your income will just cause harm to you only. When you apply for these loans, you are supposed to provide information related to your spending as well. Most of the borrowers hide their expenses to persuade them to believe that you have a strong repaying capacity so that they can lend you money so quickly.
This is a big mistake because you will end up borrowing more than your affordability. Make sure that you disclose your income status and expenses details correctly. This will make it easier for you to borrow money at the most affordable interest rates.
Doorstep loans can undoubtedly be a smooth way of borrowing money to fund emergencies, but you should bear in mind that these loans may be expensive. Doorstep service will add to the cost of the debt.
You can get these loans at affordable interest rates if you choose an instalment repayment plan, avoid no credit check loans and, above all, disclose your income and spending details correctly.
James Wince is the lead author and financial expert at MyLoansBoat. With a decade-long journey in the financial market, he has actually amassed comprehensive understanding and hands-on experience, which he gives his informative, useful, and reader-friendly posts. Covering a broad spectrum of financial subjects – from personal loans to business financing, mortgage refinancing to debt consolidation- James has an incredible capability to break down complicated financial lingo into understandable language, permitting readers to make knowledgeable choices. Enthusiastic about financial literacy, James’s objective is to browse our readers through the frequently frustrating seas of finance.