By: Jeff Gitlen

Loans Without Credit Checks | Alternatives Loans to Consider

No matter how quickly you need the cash, think twice before getting a loan without a credit check. Why? Because they are potentially as predatory as payday loans and can trap you in a cycle of debt for years. These bad credit loans – also known as no-credit installment loans – come with annual percentage rates of up to 400%. This is way above the rates you’ll find at credit unions or with credit unions and banks.

What’s Wrong With loans without a credit check?

In addition to no credit checks, these loans have no gauge of your repayment capacity and lenders can easy access to your bank account for automatic withdrawals. Loan amounts range from $ 100 to several thousand dollars. Borrowers typically make a lump sum payment. But the exorbitant interest rates on an online loan make it worse in the long run.

The loans are usually marketed with a promise of same or next day delivery of funds. Some loan providers also add additional products like credit insurance or charge a fee that further increases the cash advance cost.

Are there any benefits?

  • No credit check loans are known for their fast, straightforward process.
  • The borrower does not require any formalities or complex documentation.
  • Applicants with a bad credit history or any other negative item on their credit report can apply. Poor credit scores won’t be a hindrance.
  • Online loans feature a quick approval process mainly on the same business day. Approval is faster than bank loans.
  • No collateral once they approve loan requests.
  • You can use such loans for anything you want
  • Easy to get a short term loan at any time of the day

The cons

There are many benefits of no credit check loans, such as quick and easy borrowing, but drawbacks also exist.

  • Some potential borrowers may be unable to borrow if they don’t have a steady monthly income, a bad credit score, or a lack of available assets.
  • Payday lenders off loans that carry higher interest rates. This is something you should take note of before you you sign the loan agreement.
  • All major types of loans, such as mortgages and car loans, require credit checks.
  • Many no credit check loans are considered “predatory” because they target higher interest rates and fees at-risk borrowers.
  • For instance, payday and online personal loans have triple-digit interest rates and harsh repayment terms, which trap borrowers in a long cycle of debt.
  • Another drawback of no credit check loans is that they can turn up on borrowers’ credit reports as of late payments or defaults.
  • It will affect their credit score and potential borrowing ability in the future.

Alternatives to loans without a credit check

If you need easy money, you may be able to find alternatives to loans without a credit check by speaking with credit counselors, religious organizations, and the non-profit community. Here are other options:

CREDIT COOPERATIVES

Even if your credit is low, consider getting a personal loan from these institutions. Most credit unions offer small loans of $ 500 or more, and they are often willing to work with you to make payments affordable. Many also have credit cards or starter loans to help you build credit. The interest rate charged by a federal credit union is capped at 18%.

ALTERNATIVE PAYROLL LOANS

Known as PAL, these loans from credit unions help small borrowers avoid the debt trap created by traditional payday loans.

Lenders online

Financial institutions for a payday loan think of borrowers with poor credit, even with scores below 600. Other direct lenders offer loans after considering factors other than credit scores, such as employment status and income. However, beware of the high fees which increase the costs.

Lenders without credit checks

Installment loans without a credit check, are costly forms of credit. Only consider these loans after ruling out other options.

Tags

  • personal loans
  • credit history
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  • no credit check loan
  • credit report
  • major credit bureaus
  • loans with no credit
  • monthly, payments
  • hard credit inquiry
  • credit scores
  • savings account
  • secured personal loans
  • good credit
  • installment loan

 

Financial Writer at Paydaynow | + posts

Jeff Gitlen is a graduate of the Alfred Lerner College of Business and Economics at the University of Delaware. Gitlen has spent the past five years writing and researching on personal finance issues which include credit cards, student loans insurance, and other. His writing has been featured in top news publications among them are Bloomberg, CNBC, Forbes along with Market Watch.

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