No credit check loans are designed for individuals who aren’t likely to qualify for traditional financing because of their credit history. While they’re meant to help borrowers avoid predatory lending, they still come with significant obstacles and should not be considered lightly. Find out more about what no credit check personal loans are and whether or not they’re a good idea for your financial situation.
What are no credit check loans?
It’s possible to get a personal loan that doesn’t require a credit check, but you need to be extremely careful when reviewing the loan terms. Similar to cash advance lending products like payday loans, no credit check loans may come with very high-interest rates. In short, they’re designed to entice borrowers with bad credit.
A no credit check personal loan may be either secured (meaning you’ll need to supply personal property as collateral) or unsecured (no collateral required). The loan amount can vary depending on the lender and the repayment period is usually over the short term. These features can result in high monthly payments and an expensive overall cost for financing.
What are the advantages and disadvantages of no credit check loans?
The advantage of taking out a no credit check loan is that you get access to financing regardless of what your credit history looks like. If you have a financial emergency and don’t have any savings or credit cards to use, then a no credit check loan could help you weather the storm.
The bad part is that no credit check loan is an extremely risky product to use. You can put yourself at a financial disadvantage in the long term by adding expensive payments to your monthly budget. When you look at the cost from the perspective of the APR, you’re likely to notice that it can be in the triple digits, compared to most personal loans only going as high as 36%. If you can’t make your payments, you may get trapped into expensive extensions in order to stay current on your loan.
How do I get a no credit check loan?
Since your credit history won’t be accessed, more weight is generally placed on verifying your income. You’ll need to provide documents such as bank statements or pay stubs to show that you have money coming in each month. If you’re approved, once you review the loan terms and decide they work for you, some lenders can transfer the funds to your account within a day or two.
A no credit check loan certainly deserves a lot of thought before reaching a decision. Don’t forget to explore other financing options if you’re experiencing a financial emergency and avoid taking on higher monthly payments than you can comfortably afford.
Disclaimer: This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.