Affordable credit

Home credit and payday lenders

Home credit is a type of doorstep lending. Compared to other types of borrowing it is very expensive. For that reason it should be avoided if you have access to other forms of credit.

The high cost of borrowing on your doorstep

Doorstep loans are often for small sums, between £50 and £500, but they come with steep interest rates as money is usually lent over very short periods. In some cases the rate can be as high as 1,500% APR. That’s much more expensive than other regulated alternatives such as a loan from a credit union. This is also true for online and high street payday lenders.

Make sure the lender is licensed

All home credit lenders have to be authorised by the Financial Conduct Authority (FCA). If someone calls at your door and offers to lend you money, you should ask to see proof that they are authorised by the FCA.

Check the FCA register to see if a lender is licensed

If they don’t have a licence, they are a loan shark and you should end the conversation and report them.

Rules for home credit lenders

If you apply for a loan, the money is delivered to your house by an ‘agent’ who will usually take your payments every week. Although there are other options, many customers find this convenient.

Why payday borrowing can cause problems

It may be tempting to turn to a payday lender if you have bills you can’t pay, but borrowing at such a high interest rate is likely to add to your problems rather than help them. If you are struggling to pay day-to-day bills, you should get free help with debt advice.

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