Life can throw you a curve ball at any time. Whether you have prepared yourself for hard times, it is likely that you have run out of time before emergency crops up. Financial problems may hit those who earn good wages, let alone the people on benefits. Government benefits are temporary funding sources hardly can fulfil all of your needs and survival becomes tougher when you need money urgently.
Emergencies do not give warnings before knocking at your door. At last minute, you will not be running from lender to lender to borrow money. You must know beforehand what you need to do if you fall prey to this situation. You must know that doorstep loans are the ideal solution if you are living on benefits. Advertised as most convenient, everybody desires these loans.
You just need to contact your lender and after pre-approval, you will have a face-to-face meeting with one of the representatives at comfort of your home. Flexible lending and no formalities are what trickle the fancy of as many borrowers as possible. Just because the representative will peruse your income statement to decide the disbursal limit, it does not mean that you do not need to do your homework.
Alternative sources to repay the debt
Loans for people on benefits (other name of doorstep loans) come with very small amount and hence the repayment length does not go beyond a month. Most of you may feel that they are easy to tackle, but things are not always as they seem. Even though you get the money on basis of your affordability, it is likely that you face difficulty repaying the loan.
If you fall behind repayments, the debt will quickly add up because of late payment fees and interest penalties. You must have a reserve of cash to dip into when you side gigs including benefits are not enough to pay off the debt.
Compare interest rates
Doorstep loans seem very affordable because you do not have to pay down the debt in multiple instalments, but the fact is they carry high interest rates. It may include the fees as a representative visits you to lend and collect money. Each lender has different policy and therefore the interest rates can vary. Make sure that you are applying for these loans with a lender who charges competitive interest rates.
Your credit report
Before you apply for any loans, you should take a look at your credit file. Though short-term loans are advertised as funding sources for bad credit borrowers, it does not mean that lenders cannot turn you down. A bad credit score is inferred as a high default risk therefore the interest rate is likely to go up, and the chances of rejection are likely to be higher in case the lender is not convinced with your repayment potential.
However, payment defaults are always not the cause of poor credit rating. Sometimes, erroneous information on your credit file accounts for it. Identity theft, wrong address, erroneous defaults are some of the causes for bad impact on your credit file. If you do not want to take out a loan at high interest rates, make sure that your credit report does not consist of any information that you do not identify.
The need of money
The easy availability of doorstep loans does not mean that you can apply for them for your impulsive buys. Despite lower interest rates, a loan can be an expensive deal. In order to avoid falling into a predatory debt trap, make sure that you borrow money only when you need it urgently. As long as you can put it off, you should avoid borrowing money. Loans for impulsive purchases will mount up financial problems only.
The Final word
Whether you need to apply for doorstep loans or any other loan, you must do your homework. It is important you have checked your affordability. It reduces the chances of falling into debt. Borrow money only when you need it urgently, check your credit score, compare interest rates and have alternative sources to repay the debt.