Doorstep loans 'prevent illegal borrowing'

Fri 11 Dec 2009 - Published in Loans

Doorstep loans stop people from accessing illegal sources of borrowing, an expert has claimed.

Recently, the Office of Fair Trading (OFT) revealed that 52 per cent of people use the products, which are small unsecured loans that have a high interest rate.

Frances Walker, head of media and public affairs at the Consumer Credit Counselling Service, said that this has been caused by alternative sources of credit drying up during the economic downturn.

"If you get rid of doorstep loans, you then push people into even less savoury types of loans such as log book loans, payday loans, loan sharks and the illegal side of things," she added.

Furthermore, Ms Walker claimed that the doorstep loans suit some people despite their high interest rates, as they allow those on tight budgets to make weekly payments.

The OFT research also found that 26 per cent of borrowers are thought to be reliant on credit cards, while 19 per cent having been using store cards to survive the recession.

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