Tackling your debts

What are the pros and cons of doorstep lending - and why do people do it?

Posted 30 August 2013

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Debt Advisory Centre takes a look into the world of doorstep lending, including what the pros and cons are, why people do it and what the alternatives are.

There are many ways of getting a loan - going on the internet, walking into a high street bank or picking up the phone - but would you be happy taking out a loan from someone 'on your doorstep'?


In the days before the internet, this was a common way for people to take out a loan - but with so many options available now, do people still turn to someone standing on their welcome mat?

Let's delve into doorstep loans in more detail, looking at some pros and cons as well as alternatives.


  • Instant decision - you could get the money straight away and you might not even need a bank account.
  • Face-to-face - you get a personal service in the comfort of your home, often with the same representative coming round to collect repayments each time.
  • Credit rating not such an issue - doorstep lenders often lend to people with less-than-perfect credit ratings.



  • High interest rate - the interest rate on loans like can be higher than on loans with high street lenders.
  • Late repayments - if you miss a repayment or are struggling to pay it back, you may feel uncomfortable knowing someone's coming round to collect.
  • Affordability - because you're not credit scored and the application process isn’t as strict as with high street lenders, you may think you can afford the repayments but only realise you can't once it's too late.


Are doorstep lenders the same as loan sharks?


No. Both lenders come round to your house for repayments on money they lent you, but doorstep lenders and loan sharks are not the same.


Official doorstep lenders have to be registered by the Office of Fair Trading. This means they can legally lend money and most importantly, as a customer, you are protected.


Loan sharks lend money illegally (normally at very high interest rates and normally from their home), meaning you don't have the same legal rights as a customer. Often they can become threatening if you can't repay them. If you come across a loan shark, you should report them to the police.


Click here to find out more about loan sharks.

What are the alternatives to doorstep lending?

This will depend on your situation and credit history. If your credit history isn't poor, you may be able to get a loan with a lower interest rate with a high street lender.


If you're taking out a doorstep loan because you're struggling to pay off debts, you may be able to look at ways of consolidating your debt or taking out a debt management plan.

by Kyri Levendi

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.