How home credit works

Two women sharing a cup of coffee

How home credit works

Families on modest incomes can find it challenging to manage their money. They may have limited ability to save and therefore use credit to bridge gaps in the household budget or buy more expensive items. They may want to borrow relatively small amounts, make weekly (rather than monthly) payments and repay in cash. Home credit is specifically designed to meet such requirements.

As the name suggests, home credit is a home-based service which is delivered to customers via agents. Home credit companies offer a home-based service because this provides the best method of understanding and responding to the individual circumstances of the customer.

The process

A would-be customer who is interested in a small, short-term loan contacts the company. An agent calls on that customer at home to obtain written consent to call back and have a more formal conversation about taking out a loan.

The agent subsequently returns to the customer's home to explain how home credit works. If the customer remains interested in taking out a loan the agent will undertake appropriate checks to get a clearer idea of that customer's individual circumstances.

For every loan, the total amount payable, the APR, the number of weekly payments and the cost of the weekly payment are clearly communicated to the customer, along with other key features. The costs of borrowing are also clearly set out for the customer on the contract they sign. The customer is provided with a cash loan by their agent when they have signed the contract. In turn, most customers make their weekly repayments in cash. The agent agrees a weekly collection regime with the customer at a mutually convenient time.

First-time customers typically receive smaller shorter term loans than established customers who have an existing record of repayment to a home credit provider.

Transparency and flexibility

Home credit is a fixed, all-in method of borrowing. This is set out clearly for the customer in the contract they receive when they take out a loan.

There are no penalty fees, late fees or extra payments. Interest and the total amount payable are fixed at the outset and cannot change. Thus each pound repaid by the customer brings down the total amount owed by a pound.

All home credit customers have a payment book. The agents update this every time a payment is made. The payment book is an up to date record of exactly what the customer has paid and what is still owing on a loan.

Late or missed payments

Agents call weekly and are therefore well placed to spot when a customer may be in difficulty.

Where a customer has a short-term problem, the agent can easily reschedule payments on the spot at no added cost. Most customers will draw on this penalty-free flexibility at some point during a loan if they find themselves unable to make a weekly payment.

Home credit is designed to flex if a customer can't pay. The total amount the customer pays is fixed and cannot increase, even if a payment is made late or missed altogether.

70%

of Provident agents are women, many of whom are former customers themselves and live in the communities they serve.

83%

of customers would recommend Provident home credit.

1 in 20

The proportion of UK households our agents visit each week.

92%

customer satisfaction rating for our home credit products.

89%

of our home credit customers say the service is good value for money.

1880

The year Provident began offering responsible, affordable credit to people on lower incomes.