Banning Doorstep Loan Companies Could Make Matters Worse
There has been a growing concern amongst regulators and debt help groups in the UK over recent years, with regard to the activities of doorstep loan companies and lenders, many of whom offer small cash personal loans to some of the more vulnerable members of society who are unlikely to be able to obtain a personal loan from more traditional sources, such as a bank or building society.
These loans usually charge extremely high rates of interest and many borrowers end up becoming bogged down with loan debts which they are unlikely to ever be able to repay.
Despite the high loan rates and bad press received by doorstep lenders, the Consumer Credit Counselling Service (CCCS) has opposed suggestions that they should be banned from conducting business, claiming that taking this course of action would do more harm than good for the consumers who use their services.
As we have already said, many of the people who take out loans with doorstep lenders would be unable to obtain the credit they need from a high street bank and without the loan facilities provided by doorstep lending companies, many would be forced to turn to illegal loan companies and loan sharks in order to get the money they wanted.
As the credit crunch and banking crisis have had an impact on banks and building societies ability, or willingness to offer loans, along with the fact that many borrowers have run into financial difficulties with their existing debts over the same period, which would stop them getting a clean credit bank loan, the popularity of doorstep lenders has grown considerably and in a recent survey amongst those individuals who use such lenders, 52 per cent claimed that they were either “fairly” or “very” dependent on this type of loan.
