Home Collected Loan vs Payday Loan

There are many types of personal loan available to UK consumers today. Sometimes the different types of loans available are hard to compare or deliberately confusing. With the huge growth in online payday loans we have given a brief summary of both types of lending.

Home Collected Loans have been around for a very long time. Some lenders have been operating in Britain for over 100 years. Companies such as Provident, Greenwoods and Shopacheck have been around for many years and are well known. Home credit offers the most personal service of any type of lending. Agents are usually from the local area and visit their customers regularly in their homes. This gives them a unique insight into the lives of the customer. They can help them through difficult periods and have an understanding of the challenges faced by customers in their community. Flex Finance only employs trustworthy, experienced agents who match the high standards that we hold .

Home collected loans are just like personal loans in the fact they have fixed periodical payments. This means if you stick to the payment schedule on the agreement then that is all you will pay.

The service aspect of home collected loans is important to many borrowers. Most find that an agent collecting payments from their homes is convenient and dicreet. Ultimately it does depend on the flexibility and reliability of the agent.

Payday loans are usually offered by online or high street lenders.  A sum of money is advanced for a period, usually 30 days or less, and then paid back with interest on an agreed date. Monthly charges vary between £12 on the high street up to £35 for some online lenders. Many online payday loan providers promise to get funds into your account in a matter of hours, but these claims can sometimes be misleading.There can also be fees involved in obtaining funds quickly.

Most Payday Loan providers let you roll over the loan for periods up to 7 months. This is where these loans can become expensive. The “open ended” nature of them means you can get caught out if curcumstances change and it is tempting to delay paying the original loan back and just making smaller interest payments every month. If you rolled over £100 payday loan for seven months at a charge of £25 you would pay £175 in interest alone! This is considerably more than even the most expensive home collected loan. There is also the danger of incurring bank charges if the funds are collected at an inconvenient time.

In summary payday loans lack the predictability of fixed, regular payments and personal service of home collected loans but can be a way to obtain cash quickly. As always look at your own situation and weigh up the pros and cons of each.