What are personal loans?
A personal loan, sometimes also called long-term financing plans, installment loans, etc. allow you to borrow a fixed amount of money which you have to pay back within a pre-decided time period. These regular payments are called installments. Borrowers can use this money to make large purchases, home renovations, paying off medical bills, debt consolidation and refinancing credit card debt, etc. Most lenders offer personal loans ranging from 500 to 50,000 with a repayment term between 6 and 60 months.
What is a credit score-explained?
A credit score is a number ranging between 300 and 850 that can significantly affect your financial life. As credit, your
credit score depicts your creditworthiness, it plays an important role in a lender’s decision to offer you a loan. Lenders check your credit score to assess the risk they may face when they lend you money. Most borrowers who apply for personal loans get to know this term for the first time when their application is rejected due to poor credit score or no credit history. Then the question often arises – how to get a personal loan with no credit?
No Credit Check Personal Loans
After facing rejection due to poor credit score, the borrower might despair and quit the idea of getting a personal loan. But, it should be music to the ears of the borrower to know that there are possibilities of getting a personal loan with no credit check. It may not be easy but there are ways to get it done. Before applying for such types of loans, you should figure out if getting a personal loan with no credit check is your only option. Because these types of loans are not risk free and you may have to pay a higher interest rate and accept terms harsher than other types of loans.
How Does It Work?
It is not like the lenders do not check the creditworthiness at all, but they use different criteria and tools to assess the risk you might pose to them. Instead of conducting a hard credit inquiry, lenders may consider other aspects like borrower’s income, information on a bank account, proof of regular employment, and a range of other criteria.
The benefit of a no credit check loan is that the application process is fast and simple, and after approval of the application, the funds are made available either the same day or the next. The cons associated with no credit check loans include higher fees and interest rate, credit insurance, shorter repayment period, etc. Fees may add up quickly if you fail to meet the repayment terms.
Who Offers No-Credit-Check Personal Loans?
Although no-credit-check personal loans aren’t as common as other types of loans, you can still apply for one through payday loan stores, auto title lenders, online lenders and pawn shops. Some lenders may require you to put up collateral which you may lose if you fail to repay the loan within agreed time period. You can get your asset back after repaying the loan but this may cost you dearly.
Get a Personal Loan with No-Credit-Check
A borrower can get a personal loan with no credit check from different lenders including:
Being a member of a credit union might be helpful in getting a no credit check personal loan from them. Credit union membership is sometimes affected by certain factors such as your employer, your location and your affiliation with a certain organization. Contact your nearest credit union or your employer to check your eligibility for membership. While calculating your creditworthiness, these credit unions often consider your financial information other than just your credit score.
Online lenders are another option for getting no credit check personal loans. People with poor credit score or scant credit history can secure a loan from different online lenders such as Prosper, Upstart, Oportun and Lending Club. These lenders may consider aspects of your financial profile other than credit score.
Payday Loan Companies
Payday loan companies are another good option but their high interest rates and APRs make them less feasible and last resort. For instance, bank issued personal loans come with an APR of around 10%, while a payday company issued personal loan might have an average APR of around 400%.
Title loans are another borrowing option but similar to the payday loans, they come with a combination of high fees and interest rates. Title loans are secured against your car as collateral so you are at a risk of losing your car if you default on your repayment.
No Credit Check- A Myth Solved
If you find a lender offering personal loans without any credit check, it is nothing but a myth. Some lenders do not conduct credit checks utilizing traditional methods like using a credit bureau but they definitely probe to assess what kind of risk you might be. These innovative checks vary from lender to lender and you have to do some research to find a suitable lender. That being said, despite having no credit, bankruptcy, or poor credit score, you can still apply for a personal loan.
What’s wrong with no credit check loans?
If any lender offers no credit check on the loans, try digging deeper because any such offer could be a red flag. Federal Trade Commission terms any such offers as an advance-fee loan scam. But with a little caution and presence of mind, you can distinguish between predatory lenders and the lenders who are genuinely offering you a personal loan with no credit check just to help you deal with your financial emergency.
Before You Apply
Even though personal loans with no credit check seem convenient and lucrative, they can be dangerous in some cases. Use a loan calculator before applying for one such loan and keep in mind the latent pitfalls while making a decision. These types of loans should be chosen only when you are in dire financial need.
Disclaimer: This content does not necessarily represent the views of IWB.