Me and Mum Trying to start a Door to Door loan Business

[Finlay the Wizard]

Hi fellow entrepreneurial wizards.

My mum and I are planning to set up our own local door to door loan company (Home credit collection). I have made this post to ask for helpful advice of any successful businessmen or women. also to ask if anyone knows how difficult it is to obtain a consumer credit license and the standard procedures that the OTF requires to give out a license. I have been doing a lot of my own research however I thought it would be a great idea to ask the opinion of others (possibly experienced in this field). we could possibly start up the company with 200 initial customers on a 50k budget.

Thanks for your time and feel free to message me or reply to this post.

 

[Mitch3473]

Does your mum have close contacts with the local underworld ?

 

[fisicx]

My mum and I are planning to set up our own local door to door loan company (Home credit collection).

If someone knocked on your door offering to lend you money what would you do?

also to ask if anyone knows how difficult it is to obtain a consumer credit license and the standard procedures that the OTF requires to give out a license.

Very difficult. Start here: https://www.fca.org.uk/firms/authorisation. It's going to cost you £1500 just to apply for a license and they also say it can take up to 12 months to get approval.

 

[Mr D]

Based on the doorstep credit industry over the years you will end up with high interest rates and chasing up a lot of debt.
Lots of excuses, lots of people you know are in and refuse to answer the door.

Also subject to government interference.

Do not know if you are aware, some of the payday lenders had to write off debts that they should never have given in the first place. Wonga can afford to write off tons in one go, could a small lender?

 

[Mark T Jones]

To answer you questions, the categories you will require on your FCA authorisation (no longer OFT licence) are a the toughest to obtain and can take several months.

You can also expect further regulation.

 

[Chris Ashdown]

If you lend someone some money and they cannot pay it back, what do you do, taking court action does not work as they have proven they don't have any money. Threatening them is a dodgy action as someone may be recording on a phone and pass on the evidence to the old nick

 

[MBE2017]

If you lend someone some money and they cannot pay it back, what do you do, taking court action does not work as they have proven they don't have any money. Threatening them is a dodgy action as someone may be recording on a phone and pass on the evidence to the old nick

The company basically takes the loss, hence very high interest rates. That said, it is all down to the skill set of the doorstep lender, I used to work in the industry many years ago for a couple of years, and some collectors lost 40% of their money, others literally lost nothing.

As with most businesses it is about relationships, but with no history in the industry or local knowledge chances are every toe rag will rip your hands off and you will take high losses originally.

As time goes by you learn to develop a good network, of both clients and parents etc, who will help their kids if they are short on money. My network also included hundreds of collectors from all the major companies who had decades of knowledge to call on, any new names were checked out before lending a bean. Strangely most turned out to be drug dealers or users. I still get asked about certain families every now and then even after having been out the industry for over a decade.

 

[Mr D]

Have used a doorstep lender years ago, we had a good relationship with him. These days I'd probably use online payday lenders if needed, much quicker and more convenient.