Loans Without Credit Check: Borrowing Options and Alternatives


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 or car title loans and can trap you in a cycle of debt for years.

These loans – also known as no credit check installment loans – come up with rates above 400% in some cases well above the rates you find at credit unions or with online lenders.

Before borrowing, consider other options and find out how these loans could put your finances at risk.

Nerdy tip: An installment loan can be a more affordable way to borrow money. These loans allow you to borrow the money all at once and then pay it back in fixed monthly installments over a period of months or years, instead of weeks. You won’t need to post collateral, and loan amounts tend to be higher while interest rates are generally lower. Lenders usually require a credit check to apply, but you can find installment loans for bad credit.

Loan alternatives without credit check

But a low credit score may not be a problem if you want to borrow from a lender with affordable rates and responsible underwriting practices.

Here are other loan options for borrowers with bad credit (629 or lower FICO).

Loans to credit unions

More credit unions offer small personal loans of $ 500 or more, and they may take information other than your credit rating, such as your history as a member, into consideration in qualifying for a loan. Many also have credit cards or starter loans to help you build a credit history. The interest rate charged by federal credit unions is capped at 18%.

Alternative payday loans

Known as PAL, these loans from credit unions help small borrowers avoid the debt trap created by traditional payday loans. The APRs on these loans are capped at 28%.

Online lenders

Some online lenders consider borrowers with poor credit even with scores below 600. Bad credits have higher rates, but lenders look at other data, like employment status and unpaid debts, to help you qualify.

NerdWallet Rating
NerdWallet Rating
Universal Credit
NerdWallet Rating

on the Universal Credit website

NerdWallet Rating

on the OneMain Financial website

NerdWallet Rating

How to spot a loan without a credit check

Unlike lenders who look at your credit report to see how you’ve handled debt in the past, a lender without a credit check offers you money without guaranteeing your ability to repay it.

Loans without a credit check can come from online or in-store lenders who promise an easy application process and quick delivery of funds. Loan amounts range from $ 100 to several thousand dollars and are usually repaid in equal, fixed installments over months or years, sometimes with additions like credit insurance or fees that increase the cost of the loan.

Some of these lenders require access to customers’ bank accounts and automatically withdraw the money on the due date.

Sample loan without credit check

If a lender charges 200% APR on a $ 2,000 one-year loan, you’ll pay $ 396 per month. That same loan would have monthly payments of $ 201 with an APR of 36% – the highest rate an affordable loan can have, according to most consumer advocates.

Excellent (720 or better)

Are There Safe Loans Without Credit Checks?

A lender without a credit check who reviews some of your financial information is a safer choice than one who lends money without asking questions.

Some online lenders, for example, examine an applicant’s bank account to assess their spending habits, deposits and withdrawals. An account that has multiple overdrafts may disqualify an applicant.

Other lenders look at reports from alternative credit bureaus that collect information on consumers with low credit scores. These reports can show things like if you got a payday loan or a title.

These lenders charge high interest rates because it’s riskier to lend without checking the credit, but the effort to determine your ability to repay a loan helps you avoid falling into the debt trap.

Source link


Comments are closed.