Doorstep loans: what are they and are they still available?

A doorstep loan is a small cash loan arranged at your home, with an agent calling back each week to collect the repayments. It's also called home credit. Doorstep loans are still legal, but the market has shrunk. The biggest lenders have left, and the few still trading only cover local areas. It's also one of the most expensive ways to borrow.

This guide explains how home credit works, how to check a lender, the red flags to look out for and the cheaper options worth trying first.

What is a doorstep loan or home credit?

Doorstep loans and home credit are the same product under two names. You'll also see it called home-collected credit or doorstep lending.

It's a small, unsecured cash loan that's arranged and repaid at your home. An agent from the lender visits to talk through the loan, hands over the money, then comes back every week to collect a repayment. Nothing is secured on your home or car.

Doorstep loans are usually for a few hundred pounds. People have traditionally used them for a replacement cooker or fridge, school uniform, Christmas, or an unexpectedly high energy bill. Some home credit firms also offer shopping vouchers, repaid to an agent in the same way.

The appeal was always the same: small sums, a quick decision and a lender willing to look past a poor credit file. What it cost was rarely as clear at the door.

How does home credit work?

Home credit runs through an agent rather than an app or a branch. The steps are broadly the same with every lender:

1. You ask for a visit: A lender can't call uninvited to offer you a loan. You have to request the visit first, in writing.

2. The agent visits: They'll ask how much you want, go through your income and outgoings, and explain the agreement.

3. The lender checks affordability: It must assess whether you can manage the repayments without falling behind on your other bills.

4. You get the money: If the lender approves you, the agent usually hands over the cash. Some lenders now pay into a bank account instead.

5. The agent collects repayments: You repay a fixed amount at your door each week until the loan is cleared.

Home credit is priced well above most other borrowing, and the weekly visit is part of why. Someone calling at your door every week costs money, and that cost is in the rate. It's easier to follow in pounds than in APRs.

When Citizens Advice compared the four largest providers in February 2017, the same loan cost very different amounts depending on which agent knocked:

The FCA put the median home credit loan at £500. At the top of the Citizens Advice range, that meant repaying £936, nearly double. Citizens Advice found the APRs behind those totals ran from 104% to 756%.

How is a doorstep loan paid back?

A doorstep loan is usually paid back in cash, every week, to the agent who arranged it. Some lenders collect fortnightly instead.

Each payment is the same. The interest is worked out at the start and spread across the whole term, so you know the total before you sign. Citizens Advice found typical terms of 20 to 52 weeks in its 2017 comparison.

You don't have to pay in cash at the door. You can ask to pay by bank transfer, card or direct debit, and the lender should consider a reasonable request to change how you pay.

You can also repay early, in full or in part, at any time. You're entitled to a rebate on interest you haven't yet been charged, though it may not be the full amount.

Keep a record of every payment. Most agents use a payment book or card. If yours doesn't, ask for a receipt each week.

Who can apply for a doorstep loan?

Approval is never guaranteed, and where you live matters as much as your credit file. Doorstep lenders only cover the areas their agents can reach, so many people can't get one at all.

Criteria differ between lenders, but you'll usually need to:

• be 18 or over

• live in an area the lender's agents cover

• have a regular income, from work or benefits

• show you can afford the weekly repayments alongside your other bills

Home credit lenders have long lent to people with a poor credit history, and they don't ask for a guarantor. That doesn't make the affordability check lighter. The lender still has to be satisfied you can repay, and no legitimate lender skips the checks altogether. Our guide to no credit check loans explains why.

If no doorstep lender covers your area, an online loan works differently. There's no agent, no weekly visit and no cash at the door. Money goes into your bank account. Sometimes you can get a same day loan if a lender approves you. The lender's checks and your bank decide when. Repayments leave by direct debit on an agreed date.

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How to check if a doorstep lender is legitimate

Every firm offering home credit must be authorised by the Financial Conduct Authority. Its agents don't need their own authorisation, because they work under the lender's. These checks take a few minutes, and they're worth doing before you sign anything.

• Search the FCA register. Look the firm up on the Financial Services Register. Check the reference number matches the one the agent gives you. No entry means don't borrow.

• Ask who they work for. An agent must tell you who they work for and what their role is. A genuine agent won't mind you checking their ID.

• Check you asked for the visit. A lender can't turn up uninvited to offer you a loan. If you didn't request the visit in writing, treat that as a warning.

• Read the agreement. You should get a written agreement showing the amount, each repayment, the total payable and the APR. Keep your own copy.

• Look for a complaints process. An authorised lender must explain how to complain, and that you can go to the Financial Ombudsman. Many also belong to the Consumer Credit Association, which has its own code of practice.

Red flags to look out for when applying for home credit

Most doorstep lenders still trading are authorised and follow the rules. Illegal lenders, often called loan sharks, also work on the doorstep. Two warning signs are specific to home credit. Our guide to borrowing money safely covers the rest.

• An unexpected knock. A lender calling to offer you a loan when you haven't asked for a visit in writing is breaking the law. Don't let them in, and don't agree to anything.

• Holding your cards or ID. No legitimate lender keeps your bank card, PIN, passport or benefits card as security. It's a known loan shark tactic.

What are the advantages of doorstep loans and home credit?

Home credit lasted for generations because it solved real problems for some borrowers. These are the genuine upsides, though each one comes at a price.

• Small amounts. You can borrow a few hundred pounds, which suits a single bill or a broken appliance better than a larger bank loan would.

• A face-to-face service. You deal with the same agent in person, which some people find easier than an app, a website or a call centre.

• Weekly repayments. A small fixed payment each week can be easier to fit around weekly wages than one larger monthly payment.

• Fixed costs. The repayment and the total are set at the start. Home credit lenders don't usually add charges when you miss a payment.

• Open to poor credit. Home credit lenders have often lent to people banks turn down, though they must still check you can afford the repayments.

• No bank account needed. Because the loan is paid and collected in cash, you can borrow and repay without using a bank account.

What are the disadvantages of doorstep loans and home credit?

The downsides are mostly about cost, and about how easily one loan becomes several. Citizens Advice helped an estimated 23,600 people with doorstep loan debts in a single year, more than for any other kind of high-cost credit.

• High cost. Home credit is among the most expensive ways to borrow. In Citizens Advice's 2017 comparison, a £500 loan could cost £936 to repay.

• No price cap. The FCA price cap on high-cost short-term credit doesn’t cover home credit. APR explained shows what the cap does cover.

• Easy to borrow again. Refinancing settles your old loan with a bigger new one. The weekly payment can fall while the total you repay rises.

• Debts that stack up. Citizens Advice found 32% of its doorstep loan clients held two or more loans at once, with an average doorstep debt of £690.

• Selling in your home. The person selling you the loan is often the person collecting it, in your own hallway. That can make it harder to say no.

• Hard to find. The biggest lenders have left, and those remaining only cover local areas. There may be no doorstep lender near you at all.

• Missed payments are recorded. Missed payments are reported to credit reference agencies whether you pay at the door or by direct debit. They stay on your file for six years.

Alternatives to doorstep loans

Before you borrow at the door, check the cheaper options in our guide to alternatives to payday loans.

A loan through a broker

If you've ruled out cheaper options, an online loan avoids the agent and the weekly visit. PaydayUK puts your application in front of a panel of lenders, who check your eligibility with a soft search, which won't affect your credit score. The lender makes the decision.

How to make a complaint about home credit

If a lender kept lending when the repayments were clearly unaffordable, or treated you unfairly, you can complain and ask for interest and charges back. It costs nothing, and you don't need a claims company, which would take a share of anything you recover.

1. Complain to the lender first. Write setting out what went wrong and what you want put right. If the lender belongs to the Consumer Credit Association, you can raise it with the association too.

2. Wait for a final response. The lender has 8 weeks to send it.

3. Go to the Ombudsman. If you're unhappy with the answer, or don't get one, you have 6 months to refer it to the Financial Ombudsman Service. It has published decisions on repeat home credit lending.

Complain within six years of the problem, or within three years of when you knew or could reasonably have known, something was wrong.

In your complaint, include every loan you can remember with rough dates and amounts, how many ran at the same time, and each time a loan was refinanced or topped up. Add your income and outgoings at the time, and bank statements if you can still get them. Mention any visit you hadn't asked for.

One caveat: several home credit lenders have gone into administration or a scheme of arrangement since 2021. Where that's happened, upheld claims usually pay only a fraction of what's owed.

Common questions

Are doorstep loans safe?

Doorstep loans are legal and regulated when the lender is authorised by the FCA, which you can check on the Financial Services Register. Safe isn't the same as cheap, though. Home credit is one of the most expensive ways to borrow, and refinancing can turn one loan into several. Anyone lending at your door without FCA authorisation is a loan shark, and you can report them to Stop Loan Sharks.

Are doorstep loans still available?

Yes, but only just. Home credit was never banned. The biggest lenders have left the market, and the firms still trading are small and cover local areas. That’s why a search for a doorstep lender near you often returns brokers and online lenders instead. If no doorstep lender covers your area, check the cheaper options in our alternatives guide first.

Can a doorstep loan lender visit any time?

No. A lender can only visit to discuss a new loan if you've asked in writing. For collection visits, FCA rules say the agent must give you notice of the date and likely time, call at a reasonable hour, say who they work for, and leave when you ask. The FCA also says visiting you at work or in hospital is normally inappropriate.

Do you have to let an agent into your home?

No. You can refuse entry at any time, and you can ask an agent to leave. Nothing about a home credit agreement obliges you to admit anyone to your house.

What happens if you miss a repayment?

Home credit lenders don't usually charge a penalty for one missed payment, but it's still reported to credit reference agencies and stays on your file for six years. Tell the lender before the payment is due and ask for a repayment plan, not a new loan. Free help is available from StepChange, National Debtline and Citizens Advice.