This is a known as a “no credit check” loan and is actually quite simple to obtain online as lenders are more willing to offer such loans and technology is there to help out.
Not only is it a simple process that can typically be done online but there are more options for providers than you may think. Approval times can also be quite fast meaning that if you’re looking for emergency funding this is an excellent route to hop on.
How do these types of loans actually work?
In the past, a lender would do a full review of a candidate via a credit check. Many lenders would actually focus on the credit history in determining whether they would extend credit or not. With a no credit check, lenders look at other critical components, such as the ability to repay, which comes from the existing income and employment. The rates will vary by lender, so shopping around at the start is always a good idea. You will expect to pay a higher rate, as well as the possibility of loan fees associated with furnishing these no-credit-check loans since it can appear as a higher risk in the eyes of the lenders.
With no credit check loans, what type of interest rates am I looking at?
While typically, these are higher, as mentioned earlier, it doesn’t mean that every lender will offer the same rates. With that comes the notion of risk, so expect to see interest rates go as high as 35%, and in some instances, it can even go higher, depending on the lender. That’s why as a borrower, while it seems like a great idea at the time, do ensure that all the related costs, from monthly interest to fees, are properly understood.
What if I have bad credit? Can I still get a no-credit-check loan?
Absolutely! This type of loan is meant for people who may have weak credit histories or are just now starting to build their credit history. The credit score becomes irrelevant regarding no-credit loans and the application process. That means this loan is for you if you have poor credit. You will not only be stuck with one or two lenders as creditors are now more willing than ever to offer these types of loans to clients but, of course, at more beneficial terms to the lenders themselves.
What if I want to use this type of loan for debt consolidation?
You can use your no-credit check loan for any reason, including debt consolidation. Debt consolidation is an excellent idea because it can help eliminate multiple smaller debts and roll them up into one loan, which means only one monthly payment. It’s a great method for debt management. Do keep in mind that while interest rates may seem higher, with the right discipline and only having one payment to make, you’re more likely to pay it off in the end.
Are there any risks to be concerned about related to no credit check loans?
As has been mentioned several times throughout here, your biggest risk is the higher interest rates that come with taking out such a loan. This is also usually combined with shorter repayment terms than other types of loans, which all lead to larger monthly payments. It could trap borrowers into becoming slaves to their debt simply to hit those monthly repayments properly.
Another area to consider are unscrupulous lenders who could be predatory or have other unethical tactics regarding how your no-credit check loan will look. Always do the right amount of research and due diligence.
Will such a loan also help my score get better?
Since this is a no-credit-check, payment history may not go to credit bureaus usually as well. That means it won’t have any meaningful impact directly. Indirectly, however, it can have a significant effect. Especially if the funds are used for debt management and consolidation. Paying off those other debts helps your score out a lot and will improve your utilization and credit worthiness. If you want to improve your score, you want to look at credit cards and loans that require a credit check, for example.
Disclaimer: All loans are subject to credit and underwriting approval. WiseConsumer.co is an information website/blog and loan search platform, not a lender. WiseConsumer.co only works with advertiser networks and partners that comply with laws and regulations. Interest rates range from 5.99% to 34.99% and depend on the assessment of your credit profile. Loans range from $300 to $35,000, with terms from 4 months to 60 months or more. For example, on a $4,000 loan paid monthly over 12 months, a person would pay $344.26 per month for a total of $4131.30 over the life of the loan.