Doorstep Loans in Ireland: Are They Same as Payday Loans?
Payday loans are famous in the UK, but no companies are selling such loans in Ireland. As the name suggests, these loans are repaid in a lump sum on your next payday. These loans have invited a barrage of backlash because they carry very high-interest rates. Considering the Ireland market, it does not seem that regulatory authorities will soon allow lending companies to offer such loans. However, various companies provide cash loans at the doorstep of people.
Doorstep service is quite popular in Ireland. Cash loans are generally offered between €100 and €500, so you can meet all unexpected expenses. Such loans are known as doorstep loans in Ireland. The lender representative will visit at your doorstep to offer you cash that you will pay back on the due date. This raises a question if doorstep loans and payday loans are alike. Are they in the disguise of payday loans? Is it a stratagem to make profits from gullible borrowers?
It is not surprising that the loan market is often discombobulating in Ireland. You all know that there are generally two types of loans: secured loans and unsecured loans. The former requires collateral, and the latter requires no security. However, they are further divided into categories of short term and long-term loans. It is hard to choose the right type of deal because online lenders offer various kinds of short-term loans like cash loans, emergency loans, unemployed loans, and the like. Since there are multiple types of short-term loans, and all of them have more or less the same features, doorstep loans are likely a type of payday loans. To get the answer, you need to understand both types of loans first.
The duration of payday loans is not more than 14 days. When you put in the application form for these loans, the lender will not run a credit check. This is why these loans come with instant approval. You can use these loans for any purpose, and on the due date, you will have to pay back in a lump sum.
If you fall behind repayments, the lender will ask you to roll over the loan. It means the repayment term will extend for another 14 days. However, you will have to pay an interest penalty and late payment fees. This is how the loan’s cost quickly adds up, and eventually, you fall in a debt trap.
First of all, the doorstep loan is not a kind of loan product. Any small loan that you get at your door service is known as doorstep loan. These types of loans are generally aimed at the unemployed, the disabled and the retired. When you put in the request for these loans, a representative will come at your doorstep.
The representative will analyse your affordability and then hand you cash to pay back on the due date. It may seem like these loans do not differ from payday loans. The only difference is you can get money at your doorstep. Wait before you conclude.
Doorstep loans are not the same as payday loans
Although they may sound like payday loans, they are not similar at all. When you apply for payday loans, it is usually your responsibility to borrow money as per your affordability. Payday loans quickly fund your needs, and hence lenders do run a credit check. They do not assess your credit file to see your payment history. They do not look at your credit file to see if you have already taken on another debt and if you will be able to manage those loans along with your payday loan.
Further, they expect you to settle the outstanding amount in a lump sum. When you fall behind the repayment date and roll over the loan, you find yourself in a debt trap. This is how payday lenders make profits.
Doorstep loans do not work that way. A representative will visit your doorstep to analyse your affordability. They will check your income records and monthly outgoings to see if you can afford to pay back what you are borrowing. Your application can be either turned down, or the lender will offer you less than what you want to borrow if they suspect about your borrowing capacity.
These loans never want you to pay back in a lump sum. The duration of these loans may vary depending on the amount you borrow, and you will pay off the debt in weekly instalments. There will never be pressure on paying back the money outright.
The bottom line is doorstep loans are not the same as payday loans. However, you still be wary about your borrowing capacity. Never borrow if you think that you cannot pay it back.