The Pros And Cons Of No Credit Check Loans
Before applying for any type of loan, you should always do your research and understand the benefits and drawbacks of it.
- Bad credit accepted – this may be obvious, but the best thing about a no credit check loan is that it does not require a credit check. As such, consumers who have bad credit can get the financial support they need when they don’t qualify with banks due to credit score issues.
- Fast approval time – Many of these lenders are designed to provide borrowers with money quickly. As such, borrowers can expect to get the money they need the same day they apply.
- High cost of borrowing – No credit check loans like payday loans often come with very high-interest rates and short terms. Due to the high interest and short repayment terms, many borrowers aren’t able to make their payments. Some end up rolling over their loans while others end up taking on a new payday loan to pay off their old loan. Unfortunately, this leads consumers into a cycle of debt.
- High-risk lenders – While most lenders who offer no credit check loans are legitimate, there is a higher risk of being preyed upon by a predatory lend
Are No Credit Checks Loans Safe?
There are many predatory lenders out there who provide loans that trap borrowers in an endless cycle of debt. No matter what type of loan you apply for, a personal loan or a no credit check loan, the safety of the loan is dependent on the lender and the terms and conditions of the loan.
Term: Loans with short repayment terms are often dangerous because it results in higher payment amounts. These amounts are harder to pay off and accumulate interest quickly when you are unable to pay.
Rate: Loans with extremely high-interest rates are dangerous as you can end up paying more on interest than the actual principal.
Eligibility: Alternative lenders with flexible requirements is a blessing for many consumers who are unable to get loans from traditional lenders like banks. However, when these requirements are too lax and a lender approves consumers who clearly cannot pay back the loan, you know that they are dangerous. These are lenders looking to take advantage and trap consumers in a cycle of debt.
Lenders That Won’t Check Your Credit Score
If you’re looking to get a loan from a bank or other more traditional financial institution a credit check is always required. This is how banks assess a potential borrower’s creditworthiness. If you know that your credit score is less than stellar you might want to avoid applying for a loan from bigger financial institutions. If you want a quick, short term loan or just a loan with no credit check then you should consider the following types of lenders:
Common Types Of No Credit Check Loans
As mentioned, there are many types of loans that do not require a credit check. However, most loans that do not require a credit check have high-interest rates and short repayment periods. Here are some of the most common types of loans with no credit checks:
Payday loans are small loans between $50 and $1,500. They have a short repayment period of 14 days and have extremely high-interest rates that can range around 500% (APR).
Car Title Loans
A car title loan lets you borrow money by using your car as security. These loans are typically small and the amount you get is based on the equity in your car. Interest rates can go as high as 60% and have terms between 3 months to 3 years. Keep in mind that some lenders who offer car title loans will check your credit, but some will not.