When searching for a short-term loan, you may have come across the phrases ‘doorstep loan’ and ‘payday loan’. But what do these terms mean, and what’s the difference between the two?
Understanding the difference will help you choose which type of loan is more suitable for you.
Payday loans
Some people start struggling for money towards the end of the month and find themselves counting down the days until they get paid again. Payday loans are designed to give you an extra bit of cash to tide you over until your next payday.
With a payday loan, you borrow the money you need for living expenses and repay what you owe on payday. However, this type of loan can be an expensive way to borrow money due to high-interest rates.
Make sure you check the interest and charges for any payday loans before you agree to the terms, as you may end up paying back much more than you initially borrowed. This can make the next month even more difficult as you’ll be starting with less money. And sometimes this can begin a dangerous cycle of borrowing that can quickly turn into debt.
Payday loans should be viewed as a short-term option rather than a long-term financial strategy.
Doorstep loans
You may also hear doorstep loans referred to as home credit or home collection loans. They are named such because the loan is delivered to your door and your local agent will collect repayments from you at home. Morses Club now also offer cash loans directly into your bank account, for both new and existing customers.
A doorstep loan is a way of borrowing small sums of money, usually ranging from around £100 - £1500. You will typically receive the loan as cash, but some lenders give you the option to have your money loaded onto a pre-paid debit card if you prefer.
These types of loan are generally paid back in small weekly instalments, allowing you to fit it around your lifestyle and outgoings. Repayments can be a little as £5 per week, making it easier to manage than having to find a lump sum at the end of the month.
As with payday loans, doorstep loans can have higher rates of interest than long term loans – this is often the case with short-term loans.
What’s the difference between payday loans and doorstep loans?
The main difference between these loans is how you pay them back.
With a payday loan, you repay the full amount once you receive your next wage or salary payment. With a doorstep loan, you pay the loan back in several weekly instalments.
Choosing the right loan for you depends on your financial situation. The most important thing is that you only borrow what you can afford to pay back.
About Morses Club Loans
At Morses Club, we want to help you feel a little more in control of your finances, but we understand that unexpected costs can sometimes throw you off course. We are one of the UK’s leading doorstep lenders, providing small cash loans.
We provide loans from £100-£1500 that can be paid back over 22, 34 or 53 weeks. Our interest rates are fixed, and there are no extra fees or charges, so you know from the start how much you have to repay.
Our loans aren’t the most suitable option for everyone, so if you are considering applying, it’s important you understand how it works.
