How is a doorstep loan different to a Credit Union?

Although borrowing from a Credit Union can be a viable alternative to a doorstep loan, it isn’t right for everyone.

With a doorstep loan you can borrow small amounts and a company representative will come and talk to you face to face about your loan.

As Credit Unions are local companies, they’re all different. Some require you to pay off over a longer term than doorstep loans, which isn’t convenient for everyone. Naturally, no one comes to your house to collect repayments, and you won’t necessarily get your loan in cash. Repayments to Credit Unions can be made by direct debit, through wages at work (if your employer has links to Credit Unions) or by using paypoint cards.

What is a Credit Union?

A Credit Union is typically where members who share something in common, such as living in the same area or working in the same industry, pool their savings together. From there, they allow other people who share that common bond (i.e. living in the same area) to borrow out of that pool of money.

Although they’re more open to lending to people who can’t get loans from mainstream lenders, not everyone is eligible to join a Credit Union. Some may require you to have savings with them already before they’ll allow you to borrow from them.

How a doorstep loan different

How simple or difficult it is to apply to borrow from a Credit Union depends on the organisation.

With a doorstep loan, new customers can usually borrow between £100- £1,000 (subject to affordability and the lender’s product range) and if accepted a company representative will visit your home on whichever day is best for the both of you and deliver the loan. You can then make weekly payments directly to them in cash. So there’s no need to set up a direct debit, or visit your bank to make individual payments. Credit Unions aren’t as flexible and there’s the chance they’ll pay the money into your bank account, whereas a doorstep lender will deliver the cash to you as soon as possible.

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How is a doorstep loan different to a credit union