Seeking a loan is a less-than-ideal situation to be in financially, but acknowledgement of that reality demonstrates the kind of responsibility you’re willing to accept to improve your financial situation.
It also ensures you know exactly what you’re getting into when you take your pick from the different options and terms offered by lenders who are willing to give you a loan with no credit check. You would also seek this kind of loan if you don’t have a credit record at all.
What is a bad credit loan?
As suggested by the title, a no credit check loan is a loan which is offered to a borrower without the lender running a credit check against their name. It’s sometimes referred to as a bad credit loan, because usually you would seek to borrow money from these types of lenders who don’t run credit checks if you needed money to deal with a pressing financial issue and you’d likely not get approved by standard lenders due to their strict adherence to the credit rating standards that classify you as having bad credit.
There are also some types of loans for bad credit customers such are;
- secured loans
- peer to peer loans
- guarantor loans
Why lenders offer loans with no credit checks?
The lender may have less stringent standards for determining the borrower’s ability to pay back the money they want to borrow. You’d just have to be able to supply proof as per the lender’s requirements that you do have the ability to pay back the loan, usually by way of proof of income. The other reason is one which you need to be wary of, which is that lenders might see an opportunity to lure you into what would essentially be a debt trap, such as how some unmerciful payday lenders gain entitlement to your salary if you cannot honour your repayment terms. That’s where you need to be vigilant about what kind of loan with no credit check you eventually decide to opt for.
Your options for borrowing money from lenders who don’t run a credit check
A common feature among lenders who offer no credit check loans criteria is the generally high interest rates they charge. Some are better than others, such as going for a no credit check personal loan offered by a credit union or an online lender, over something like a payday loan. Since they target longer term borrowers (36-60 months), online lenders and credit unions are more reasonable with their Annual Percentage Rates (APR).
The bottom line is that you would turn to this kind of bad credit loan, which doesn’t require a credit check, to furnish a pressing financial matter and you’re sure you can come up with the full repayment amount very soon – typically your next payday.