All payday loans will have age restrictions, ensuring that no minors get into bad debts that they can’t pay off. Most loan companies require you to be a UK citizen, and many payday firms will insist that they have a valid phone number for you, too, which will enable them to contact you to discuss your account details and repayment plans. It’s important to remember that payday loan companies have to work under some strict rules and regulations laid out in the industry by the Financial Conduct Authority – also known as the FCA. In this sense, there is a particular element of consumer protection for you, and the payday companies have to act responsibly when it comes to lending.
For example, many payday loan companies will not lend to anyone who lost their job. Or, they won’t offer applicants payday loans on benefits. The idea is that the FCA needs payday companies to be able to prove that the borrower can afford to pay the loan back. And if there is no proof that you can repay the loan, the lending company would be deemed as irresponsible for agreeing to it. And, naturally, that tends to result in a crackdown and possible fine for the enterprise if the FCA find out.
What if you don’t have a bank account?
As we mentioned in the introduction section, it is possible to get a payday loan with no bank account. However, that doesn’t necessarily make it a good idea. In fact, it could be incredibly dangerous to your long-term financial health if you decide to take up an offer from a company that does provide loans to people without bank accounts.
These types of loans are known in the trade as ‘doorstep’ or ‘home collection’ loans. These loans are typically small and are completely unsecured. And, they are often used by people who have a poor credit history and can’t borrow any money from any other source – because they don’t have a bank account.
It’s entirely reasonable to say that these doorstep loans are a very different beast to the average, run of the mill payday loans. They tend to work in completely different ways to payday loan companies and banks, which we will attempt to explain right now.
How a Doorstep Loan Works
The process starts by a consumer contacting a doorstep loan company online or over the phone. They fill out an application form describing their personal information and financial history. The company will look into your request, and make a decision on whether they can help you or not. Once that decision is made, they will contact you to arrange a meeting, and if you agree, they will visit your home for a face to face meeting.
Once the agent visits you, they will discuss the terms of your loan. If you agree and sign a contract they will lend you cash, rather than transferring money into a bank account. The transactions are usually quick and painless. However, it’s important to understand that the agent will visit you every week to collect the weekly repayment you owe. And they will continue to do so until you have managed to remove the entire debt.
Does the idea of a home collection scare you?
As you can imagine, these types of home collection loans can be incredibly intimidating once you have taken one out. There are plenty of horror stories out there that reveal the extent of interest that some people have to pay. Some describe aggressive nature of the burly men coming to your doorstep to demand money. Quick loan companies certainly do charge you a lot of money in interest if you are late with payments. However, at least you won’t feel intimidated on your doorstep every week. Like payday loans, doorstep lenders are regulated by the FCA, but the truth is that many companies operate without authorization. It is incredibly important that you can distinguish between a legitimate company or a lender that hasn’t signed up to the FCA’s code of conduct. Otherwise, you can expect some incredibly hairy moments on your doorstep.