Home credit explained

What is home credit?

Home credit, also known as a doorstep loan, is a method of borrowing money. It is a little different to other forms of borrowing because it is personal and face to face. A loan agent comes to your home and issues your loan, and then returns to collect your repayments each week at an arranged time. Loan agents work on behalf of specific home credit companies, each of which are authorised by the Financial Conduct Authority, and have a set of rules to abide by.

Home credit loans

Home credit lenders offer unsecured, personal loans which can be used for whatever you need - from DIY to car repairs. Generally, there are no extra fees or charges for missed or late payments, excluding returned cheques. The interest rates are built into the cost of the loan, so you will know upfront what your loan will cost you, and you are always aware of how much of your loan you have left.

How it works

Each company will operate a little differently, but with most you will apply online or over the phone, and then it will be arranged for an agent to come to your home. They will finalise your loan with you and go through affordability checks to help you to borrow an amount which is suitable for you. They will then hand over your loan, so you will have the cash to spend as soon as you need it. After this, the agents will collect your repayments from you. All agents are given appropriate training and have guidelines to follow; they are there to answer your questions as well as make their collections.

Why choose home credit?

There are many reasons why people might choose home credit over alternative methods of borrowing. It gives you a friendly, personal service that is not always available with other forms of lending. You know exactly how much you will pay back from the beginning, and the loans start small, often from as little as £100, so you don't get into unnecessary debt. In turn, the repayments can be small and affordable, and because we deal with you as an individual you know that you will only borrow as much as you can afford to pay back. It is a more flexible method of borrowing and if you find yourself in difficulty, the agents will try to assist you in alternative payment options.

Most home credit companies belong to the Consumer Credit Association, which has a lot of great information on this method of borrowing.

Representative Example:

£200 loan repayable over 20 weeks at £15.00 per week, Rate of interest 50% fixed; Representative 756.5% APR, Total Amount Payable is £300.

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