No Credit Check Personal Loans
When it comes to lending no credit check personal loans might not be the best option, but they are often the only option. Personal loans are typically high-cost, and issued with numerous interest charges plus origination fees that make them some of the most expensive ways to access credit. However, if you find yourself in a serious financial bind, and absolutely need to borrow money without a credit check, then this might be your only solution. There are a few ways that you can evaluate the market for no credit check personal loans that will work for you.
Why you might seek a personal loan
In general, personal loans should be reserved only for cases where it is an absolute necessity that you borrow cash immediately. This may be for an unexpected car repair, to pay for important bills (utilities, water, and trash, for example) that are due soon, or to cover the cost of a medical emergency. You should not, under any circumstances, seek to use a personal loan for the purposes of having more cash before payday, especially avoiding any no credit check personal loans.
When a lender provides a service without a credit check, it is likely that they’re doing it because they plan to cover the risk of making the loan with high interest, fees, or occasionally, some collateral against the loan. Without a credit check, the lender assumes that you have the worst possible credit history and credit score, and assumes that the chance you will repay in full the total amount borrowed is rather low. To make up for the cost of the numerous people who default on their loans, fees, interest charges, and other costs are added in on top of the market rate of interest.
Avoid application fees
The relatively small but growing market for personal loans has attracted more than its fair share of untrustworthy companies. The best way to separate the good from the bad is to examine how the company makes money. A personal loan originator who charges an application fee is sure to be a poor quality lender. After accepting your application, and the fee for applying, you can be sure that the lender now has very little interest to lend to you. Why would they extend to you a personal loan if they have already earned a risk-free profit by merely accepting your application? The reality is that the honest and trustworthy companies do not charge application fees, so use this tip to separate the bad from the good immediately.
Never borrow more than can be repaid with interest
When most people seek out a no credit check personal loan they start by thinking about how much money they need from the lender, not how much they can pay back at the due date. While it is important to seek to borrow as much as you need, it is even more important that you do not borrow so much that you can’t pay off the loan in full when the loan is due, usually 14-28 days from the time of origination.
Payday loan and personal loan companies will usually not extend credit for an amount greater than the person can afford to pay with their next paycheck. However, consider that if you were strapped for cash now, you’ll probably be just as strapped for cash in the future. You shouldn’t borrow so much that you merely worsen your problem. Loans should have an end date; they should not become a perpetual lending source for your borrowing.
Is your credit really that bad?
When you go to borrow from a company that doesn’t credit check, you’re essentially admitting, without checking, that your credit score is far lower than it should be. Before seeking an instant cash loan from a source that does not pull your credit, consider seeking less expensive creditors such as your banking institution, or even a credit card company. While credit cards are known for having high interest rates of 20% or more per month, personal loan companies often charge that much per month, and have fees that bring the annual effective interest rate to 300% or more!
Always seek out a lending source that can beat the cost of a company that does not check a borrower’s credit score. The worst that happens is that you are promptly denied, and then you can go to plan b to borrow from a personal lender. Getting denied for an alternative loan with better terms will not affect your finances in any way; however, borrowing from a payday lender when there are less expensive options available surely will!