Different countries have different lending practices. The US and UK loan markets are quite similar, but there are a few important differences. Governmental and state rules of borrowing, as well as the policies and procedures of lending companies and banks, differ. Credit comes in different forms and from different institutions. In the UK, borrowers can choose high-street or sub-prime lending from options including traditional banks and credit unions, online banks, doorstep lenders, logbook loans or pawnbrokers.
In the UK, the traditional approach to borrowing is to secure a loan from the “high street.” Borrowing in this manner has advantages in that the lender is generally a large, well-known institution with numerous branches, making them convenient and accessible for customers. High-street lenders also have the advantage of offering many different types of loans, and borrowers are able to discuss their needs and suitable options face to face. Borrowers should always check a range of APRs and choose the loan with the lowest.
High street loans are suitable for individuals who have a good credit history and present low risk to the lender. For people with a tarnished credit history, however, a high-street loan may be difficult to secure. For these borrowers, an online lender may be a more promising option, or they may turn to “doorstep lenders” offering sub-prime rates.
Doorstep lenders usually offer loans for people with poor credit history or low income who find it difficult to borrow money from other sources. The amounts of doorstep loans vary from lender to lender, but they are usually small sums, sometimes as little as £150. These loans are quick cash loans, like payday loans. They usually have high interest rates and short repayment periods. If you want to borrow in the UK, the Financial Services Authority (FSA) budget calculator will help you by comparing your income to your expenses and calculating how much you can afford to repay on a monthly basis.