When it comes to loans, most people think about the typical procedure of being able to borrow money from a lender based on their credit history, which in turn becomes the basis for a number of things, including:
- Whether or not the loan will be granted,
- The total amount of the loan,
- The repayment term,
- Interest rates, and,
- Other loan conditions.
To determine credit history, the lender has to look into your previous credit transactions, specifically with other lenders and financial institutions, or through credit reporting agencies that compile this data. In most cases, credit ratings and history are crucial to the approval of the loan because they are a standard for credit trustworthiness (ex. your ability to pay back the amount loaned).
But most borrowers know that not all credit histories look pretty. As such, it’s hard to convince lenders to loan them the money they badly need. That’s where no credit check loans can help.
What are No Credit Check Loans?
As the name suggests, they’re the kind of loans that lenders give out without checking the borrower’s credit history. There are certain lenders that are willing to forego the credit checking process to lend up to a certain amount, making them the perfect solution for people who might not get loans given their credit history.
Most of these no credit check loans are considered as personal loans, mainly because they’re aimed at individuals who have personal financial problems. In lieu of a credit history and ratings, these lenders will consider other things to offset the risk of the loan, such as:
- Lower loan value
- Higher interest rates
- Shorter terms
- More restrictive conditions
- Collateral, in some cases
But this doesn’t mean that these types of loans are disadvantageous. They are aimed primarily at people who can’t get conventional loans. This leads us to our pros and cons.
Advantages of Getting No Credit Check Loans
Basically, no credit check loans tend to be more expedient because naturally checking one’s credit history can take some time. With that out of the way, these loans become immediate source of funding, especially at times when you need them the most. Security also leans towards the borrower gets the money almost immediately.
With all that in mind, the following is true:
- No credit check loans tend to get approved faster,
- You are not required to put up collateral, and,
- Interest rates tend to be fixed because of the short-term nature.
While no credit check loan interest rates are not as good as the rates found on most unsecured loans, their fixed values make it impossible to be caught off guard by random interest spikes causing huge boosts to your owed amount.
Disadvantages of Getting No Credit Check Loans
As mentioned before, lenders will find other ways to make up for the risk that they’re taking when they lend money without checking credit history. The small nature of the loans can be seen as a disadvantage itself.
- No credit check loans have to be paid off quickly,
- The amount you can borrow is less than with traditional financing, and,
- Failing to repay in time can create a cycle of late fees, accrued interest, etc.
When to Get a No Credit Check Loan
The long and short of it is that you should get a no credit check loan if the loan serves your purpose. That is, you need a small amount of cash immediately and you have no means of acquiring other kinds of loans.
- When you have poor credit history – when you think that your credit history is not very good. It’s nothing to be ashamed off because it does happen to people under a financial crisis, but that’s not going to help you get the money you need now.
- When you have insufficient or no credit history – so maybe your credit history isn’t so bad – because you don’t have one. That’s not going to cut it either, since lenders will still want to check for credit trustworthiness. In this case, a no credit check loan will work for you.
- If you have a more or less acceptable credit history, but you don’t want lenders looking at it – people also go for no credit check loans for privacy purposes.
- When you need immediate cash – while most loans can get approved on the same day even with credit checks, they do get delayed sometimes because of it. Consider this when you need to money and have no time for the paperwork.
- When the amount you’re loaning isn’t too high – most no credit check loans have a limit. Make sure the amount you’re borrowing fits into that limit. Most lenders can give out as little as $100 and up to $2,000 in no credit check loans.
When Getting a No Credit Check Loan is a Bad Idea
Never take out a loan that you can’t handle. At the very least, don’t get a no credit check loan if it can only make things worse for you. So if you’re under any of these circumstances, you might want to reconsider this type of loan:
- When the interest rates are too high – not all no credit check lenders are created equally. Some of them tend to be very unfair. If you think that you won’t be able to catch up with the interest rates and fees in the future, then you should steer clear from that lender. Remember that no credit check loans tend to have short terms, so you know that you’ve got to make payments soon. Always take that into perspective.
- When you need larger amounts of money – no credit check loans can only get you so much. So if the money that you need is significant, such as more than the average $2,000 per single loan, then you can consider some alternatives such as getting a loan with security.
- When alternatives are available – no credit check loans are not the only solution to borrowing money with a bad or unsatisfactory credit history. Check those other loans as well and see if they’ll work better for you.
- When you actually have good credit history – why go for a more burdensome type of loan when you don’t have to? If you’ve got good credit history, get yourself a more favorable loan with much better terms. You’re already in a financial bind; you don’t have to be too hard on yourself.
The Types of No Credit Check Loans
- Payday Loans. These are popular online loans that are also called cash advances or payday advances. Nowadays, these payday loans no longer have to be directly related to the borrower’s actual payday. But they are still short term, unsecured, and usually come in small amounts. They don’t require much checking of credit because of its short term nature. Payday loans are great for those relatively small but urgent financial needs, such as bill payments, utilities, and other sudden costs that cause you to go beyond your monthly salary.
- Installment Loans. These offer a longer term for the loan because they’re space over months or years. Because of this, you might have to pay higher interest rates in the long run, but they’ll work perfectly for those who can’t pay back the sum within the short period of time. This type of no credit check loan will be great for those who are looking to pay off bigger debts like medical expenses, car repairs, and some huge home maintenance or repair issue.
- Personal Credit Lines. This is well known for their flexibility. Basically you have a line of credit with a certain amount that you can withdraw and borrow at different times. You get charged varying amounts of interest depending on the amount you borrowers. The good thing about this is that you don’t have to reapply every single time you get cash from your personal credit line. In fact, the lender won’t even look into your credit history for as long as you stick to the limit that you’re allowed to borrow.
Note: there are other types of no credit check loans than the ones mentioned above. Make sure you take time to explore ones that are available in your location so you can get the best kind of loan for you.
Guide to Getting a No Credit Check Loan
So you’re sure that a no credit check loan is the best option for your situation. What now? You start getting one, ASAP! Here’s how:
- Figure out if you’re qualified. There are certain requirements that need to be complied with the lenders that you’ll be borrowing from. Some of them will have slightly different requirements, but here are some of the common ones:
- You must be at least 18 yours old. This is a given across all states. Lenders are not allowed to lend money to minors for obvious reasons.
- You need to have been employed for at least a month. This isn’t always a strict requirement, but generally lenders will want to deal with borrowers who have had a job in the last month prior to the borrowing.
- You need a checking account. Because your credit history won’t be looking into, you need to offer some kind of means of paying back. A checking account is something that most lenders will rely on for security later on.
- You must be a citizen or a permanent resident of the US. Just like the age requirement, this is required of lenders in all states for security reasons.
- Compare your options. Much like the rest of the loaning industry, lenders will also compete to offer you the best no credit check loans within your locality. Make sure you shop around before you decide to borrow from one.
But the question is, how do you compare one credit check loan from another?
How to Choose Between No Credit Check Loans
Aside from the legitimacy of the lender, there are some cost factors to consider.
Ask yourself …
What fees are involved?
Actually lenders are regulated by the ASIC when it comes to the fees they are allowed to charge borrowers. Because we’re talking about no credit check loans, they fall under the rules for loans that are less than $2,000 and with terms for up to one year.
But some lenders will try to be competitive by offering lower rates than the maximum so you will decide to borrow money from them. Here are some areas where they will vary:
- Establishment fees or the fee imposed for taking out the loan. This is usually 20% of the total amount loaned.
- Accounting fees which is charged monthly. Usually around 4% of the amount loaned.
- Government fees, though this is usually fixed, but some lenders might shoulder the cost in your favor.
- Default fees, which refer to the penalties you pay when you fail to pay the loan on time.
- Enforcement expenses, which also refer to additional costs for failure to pay the loan.
Moving on, two more points to remember include:
- The Lender. Many no credit check lenders work online, so their reputations might be an issue. You might want to pick the ones that have proven their integrity and trustworthiness because you might end up falling victim to scammers and lenders who steal your personal information. Check with family, friends, local government agencies, and other reliable sources as to which lenders are legitimate and friendly.
- Terms and Conditions of the Loan. Not everyone will like the same kind of no credit check loan. After all, some lenders have lower maximum loan values than others, while others will have shorter or longer terms. Others still, will have less flexible payment methods. While there’s no hard and fast rule as to which no credit check loan works for you, you can narrow down your options by ruling out the ones that won’t.
Quick tip: Shopping around for the right kind of lender might be too impractical for those who are in need of cash immediately (which is one of the main reasons why you’re getting a no credit check loan). To avoid this, try to figure out your options even before the need for the loan arrives. Doing your homework on available no credit check loans sooner than later will benefit you in the long run.
Next, figure out your financial plans …
This includes two main questions:
- How much do you need to loan?
- How do you think will you be paying the loan?
These two questions separately refer to the loan amount and the loan term and payment scheme. Figuring out how much you need will determine whether you’ll be able to borrow from a lender because no credit check loans tend to have a limited ceiling. However, some lenders might consider cutting you some slack depending on your circumstances and how much you actually need.
You also need to consider how you’re paying back the loan. This means thinking about the source of the funds for repayment and when they’ll be available. This will help determine how you’ll be arranging the loan with the lender. Will you be paying a lump sum on a specific date, or will you be paying by installment?
Naturally, both factors will affect interest rates, so …
Get your papers in order. The documents you will need aside from the fully accomplished forms you will get from the lender will depend on the lender as well. Make sure you know whether you have them and, if you don’t, where you can acquire them. This will expedite the process even more.
Fill Out Your Application. Depending on the lender, this can be done online or on site (in their office). You’ll get your no credit check loans usually within the day.
No Credit Check Online Loans to Consider
Looking to some no credit check loans but doesn’t know where to start? Here are some lenders you might want to look into online.
Nimble Short Term Loan & Cash Train Payday Loan
These are two payday loan companies that offer no credit check loans for up to $2,000 per loan.
They both charge 20% establishment plus 4% monthly accounting fees.
Nimble Short Term Loan, however, has a 16 to 365-day loan term and get their loans approved in an hour’s time. Cash Train Payday Loan, on the other hand, have a less flexible loan term of 10 weeks or three months and can approve their loans within one business day.
While Nimble Short Term Loan outweighs Cash Train Payday Loan on that aspect, both are still pretty good choices because they lend up to $2,000 at once.
Loan Ranger Cash Loans & Ferratum
If you don’t need that much money, you can go for Loan Ranger Cash Loans and Ferratum, which offer loans of up to $1,000 each.
They approve their loans a bit faster than most lenders because they can give the money within the same day of application. They both have loan terms of 16 to 30 days, but Ferratum can offer 22-day and 32-day loan terms for those looking for more daily flexibility. They also charge the 20% plus 4% establishment and monthly fees.
Sunshine Loan Centers
This is the “in between” lender among the group because it offers as much as $1,800 in no credit check loans. For something a little less than $2,000, you get a 16 to 30-day loan term approved in as little as 30 minutes. The 20% plus 4% establishment and monthly fees stay the same.
The ones mentioned above are by no means the best or the only no credit check loans available. Feel free to check other sources and recommendations when you hear about them. The ones above, however, are pretty good choices given the standards in this article.
Alternatives to No Credit Check Loans
Not looking into no credit check loans? Don’t worry, you’re not without options.
Here are some things you might be able to resort to in case no credit check loans are not what you want.
- Credit Unions. You won’t always need your $2,000 loans, so you might want to settle for something that offers smaller amounts for an even simpler process. Your local credit unions might be able to lend you $500 or higher loans. And the best part is that it doesn’t matter if you have poor credit. Plus, most union credit interest rates are capped at 18%.
- Other Online Lenders. As mentioned before, online lenders don’t always have solid reputations. That’s why they also tend to be lenient with loan conditions to warm up to borrowers. If you think you need to get a regular loan but can’t get them with banks and other financial institutions, you might just find one online that’s going to help you out despite your bad credit history. And even if you have to adhere to stricter loan conditions because of your credit history, there are instances where that 36% interest rate is a more financially sound option than an installment loan.
Do No Credit Check Loans to Build Credit History?
In fact, many people resort to no credit check loans in order to build a credit history or help improve one that’s already in a bad state. This is because it’s easier to close loans like these due to their short term nature.
By engaging in lots of no credit check loans (not simultaneously, of course, because this can backfire), you close out more and more transactions with different lenders which will go down your credit history.
Pretty soon, you’ll be able to have better credit history and you’ll be able to apply for bigger loans from other financial institutions without having to pay penalties or higher interest rates!