Doorstep Loans Under Scrutiny

We all know that Doorstep Lenders have the highest rates of interest when it comes to borrowing and some of those can make it seem cheaper to go to the local loan shark, to get the cash that you need, not that this should be done either, may I add.

Doorstep borrowers say that they’re higher interest rates, are done to the higher overheads that they have, mainly due to having to pay agents to come to your home, to collect payments and to pay them commission on any of the loans that are sold to the customer.

This has led to The National Consumer Council calling for the Doorstep lenders, to stop the payment of commission to they’re agents, so that there is no need for the hard sell and pressure that many people may find themselves under, from agents looking to make has big a wage for themselves as possible, on the back of people who many can ill afford the loans in the first place.

The National Consumer Council, has said that if a better basic wage was given to the agents, then the need for the hard sell to gain as much commission as possible, would hopefully make agents less reliable on the commission, meaning less pressure on the customer to accept a loan that they don’t want or cant afford to pay back. Which leads to “Roll Over Loans” that people take out to simply pay off the interest charges from the last loan, thus paying interest on top of interest.

A select few lenders are dominant in the Doorstep loans market and this could also be a contributory factor in the high interest rate that they attach to they’re loans, so the need for more competition could bring the interest rates that they charge, down to a more acceptable level, if more companies are fighting for a share of the Doorstep loans market.

An inquiry was set up where all the major consumer bodies were present, as well as The National Consumer Council, the Consumer Credit Association, Which? And Debt On Your Doorstep, as where the major players in Doorstep lending, Cattles, Provident Financial, S&U and London Scottish.

The inquiry is to try and help the consumer to a better and fairer deal from the lenders and also to ban the sale of “Roll Over Loans” being made with the same loan arranger, the commission may also order some of the Doorstep lenders to stop selling in different markets.

The findings of this inquiry are expected by the years ending.