A doorstep loan is a type of loan where you get cash at the door. It is a breakthrough from a traditional loan where one walks up to a lender to get the loan. Instead, individuals can get the loans home by filing an application online. Lenders provide the flexibility to provide immediate cash help online or offline. Flexibility is usually ideal for short-term purposes or emergencies.

Moreover, door-to-door loans do not call for complicated eligibility parameters. One may qualify by just revealing a regular income source. It is the reason the loans are quite popular among individuals with different income brackets. However, ease of accessibility makes one depend on these loans for short-term purposes every then and now. If one fails to maintain payments, he quickly enters the debt arrears.

Doorstep loans are quite expensive, and arrears could eventually impact financial well-being. It gets complicated, especially for individuals like unemployed and low-income individuals.

Conversely, if managed well, these loans provide the easiest way to manage repayments hassle-free. If you rely on doorstep loans often for short-term purposes, the blog may help. It lists some ways to manage payments to avoid debt arrears.

However, before that, let’s analyse how non-repayments may impact finances.

Impact of doorstep payment arrears

Doorstep loans are indeed the best way to finance emergencies. However, missing a payment or a few may lead to the following circumstances:

· Impact the credit score slightly

· It can become burdensome for individuals with low finances

· Missed payments increase overall loan costs

8 Ways to maintain payments on a doorstep loan

If you have been struggling to pay the doorstep loans, the primary reason could be mismanaged finances, unstable income or a major financial emergency. Whatever it is, you can lead the payment anytime. Here is how you can do that:

1) Identify the shift in income or expenses

The primary reason behind missing payments is – instability in income and finances.  It could be due to any reason like- slow business, slashed pay due to company loss, or unemployment. The sudden change impacts the timely repayments. Analysing the existing income and liabilities will help you re-think the payments. You can brainstorm the best ways to dominate the finances here.

For example- if the existing shift in finances has significantly impacted the capabilities to clear the debts, pay a part. Or you can consolidate some debts and use the money to clear the doorstep loan payments. The decision may help if you have too many doorstep pending payments.

2) Analyse the amount you can pay

By analysing the finances, you can easily decipher the amount you can comfortably pay. You must do it even if you can pay only a limited amount. It would help you reduce the debt slightly. However, it should not impact your budget’s bottom line. Otherwise, it would impact other aspects of your finances.

 If you are currently out of the job but want to clear debt sooner, search for a direct lender for guarantor loans facility. It is the perfect solution for someone having huge doorstep debt arrears but having someone to back it up. It would help you eliminate the impact of constant rising penalties and safeguard minimal finances hassle-free.

3) Re-schedule payments

Other aspects of the payments are informing the lender is the most important part. He would help you maintain and track finances and regulate better. They may help you maintain it by rescheduling repayments. With rescheduling, you pay what you can afford within present circumstances.

Moreover, it reduces the additional burden on your finances and helps avoid getting penalised for late or no repayments.  

Always re-check the new agreement before providing your consent. It would help you avoid financial mismanagement.

4) Try to make overpayments

Usually, paying extra is an option for those sharing the financial capabilities to do so. Otherwise, it may further impact the finances and life goals. 

Not every lender allows one to overpay on these loans.

The reason is- these loans are short-term purpose loans without any collateral or guarantor requirement. It just requires one to hold a regular income to qualify. This ease of qualification comes with high interest rates and costs.

Overpayments can prove wonder here. You can pay a higher sum as a repayment than expected on the repayment date. It would help you analyse – the total amount due. Moreover, it also helps reduce the interest accumulated over the term due to missed payments.

Under this, most individuals share queries like-

How much should you pay towards the loan as an overpayment? 

Well, you should be careful about the amount you want to pay. It must be well-analysed. Follow the below tips to pay the right amount:

· Analyse the actual repayment amount

· Analyse the liabilities (new liabilities)

· Decide the actual payment amount by keeping emergency flexibility

· Identify the positive impact on interest rates by paying a particular amount

· Re-adjust it accordingly.

These are some ways to carefully develop and regulate your repayments without missing any.

5) Refinance the doorstep loans

As per a general rule by citizen’s advice, one must not re-finance short-term loans like payday more than twice to achieve other big goals. It is because -individuals refinance their doorstep debts in the wake of getting rid of them.

Refinancing helps one fetch better interest rates and lower the overall loan costs. However, it may not be ideal for every credit history or finances.

You may pay more than what you borrowed on the interest rate by refinancing your doorstep loans.  

However, certain aspects of the loan refinancing lender can help:

1) Limiting the number of times one can refinance doorstep loans

2) Ensuring that a customer never pays more than one borrows

According to wearecitizenadvice, “Following this practice of refinancing the loans would help reduce stress and save up to £123 million on over 54000 doorstep loans.”

Apart from that, the most important part to know is- Should you refinance your doorstep loans? Is it beneficial for your finances?

Let’s understand.

When should you refinance your doorstep loans?

If you want to refinance your doorstep loans to avoid the constant debt burden, you must analyse the below things. It would help you know whether or not it is the right option for you.

· You want to fetch lower interest rates

· You want to reduce the monthly repayments

· You have over 4 months to repay the loan

· You want to move on to the next big life goals by refinancing existing debts

Thus, if your total debt repayment term is less than a month, refinancing would not help. It would not help you save on interest costs much. All in all, it would not be much beneficial for your finances.

Alternatively, if you have pending doorstep loan arrears for over 12 months, the debt collection agency may act against you. However, they may never force you to pay the loan but may impact your credit score.  

In this case, doorstep loan arrears can be stressful. Refinancing may help you clear the loan instantly and walk up to the new goals hassle-free.

Bottom line

These are some expert ways to manage and pay your doorstep loans.  It would help you avoid the penalties and safeguard your finances from hiking doorstep loan interest rates and costs.  Whether you have limited pending repayments or many, you must seek immediate expert help to regulate these better. Eventually, it would help you achieve other big goals.