These are loans given by a lender to the borrower without the lender performing a hard check on the borrower’s credit score.
A no credit check loan is appropriate when you have an emergency expense as once you apply for a loan, the cash is deposited almost immediately or the same day of the application. Most of these are online loans where the application process involves filling a form online. Some of them, however, require you to go to an office but the application process remains easy.
Types of no credit check loans
- Payday loans
Payday loans are loans given to a borrower by a lender to be paid on the borrower’s payday. It is convenient for you since you will get the money for your emergency need immediately however, you will be required to pay back both the capital and the interest on your payday. The interests can also be hefty.
- Collateral loans
This kind of loan is secured on your car. The lender will conduct a soft credit check to confirm your existence, your address, your bank account, current salary, and a working phone number. These loans are typically short term loans and will often have high-interest rates with annual percentage rates of about 400%.
When to consider No Credit Check Loans
Given the exorbitant interest rates, it is generally best to avoid these kinds of loans. They should be considered when you are completely out of options. Once the lender has your bank information, they will not need to check with you before making the debit, this may cause you problems seeing as maybe you already have other more important financial obligations such as a mortgage and may not be met due to the debit that was made because of your loan. The situation can continuously get worse than the situation you were in when you considered the loan in the first place.
Consider other options
You may be wary of your credit score which could lead you to apply for the no credit check loans but some times it is worth a try. Visit your bank and have them lay it out your borrowing options for you. There is a personal unsecured loan that will give you more time to repay your loan and you are at freedom to do as you please with the money. These loans also have lower interest rates and will help you rebuild your credit score.