You may find yourself in need of a quick loan for an unexpected expense, however, maybe your credit score isn’t in top form and you’re nervous if you’ll be able to obtain a loan at all. So, you may think you can’t apply anywhere for a loan yet that isn’t the case it is possible to obtain and apply for a No Credit Check Loan. Types of loans like these lower the requirements that may be attached to other traditional loans.
What is a No Credit Check Loan?
When seeking a traditional loan the lending institution tends to check the applicant's credit report to see how they’ve managed to pay back debts in the past. Now, the difference for no credit check loans is that the lender offers the loan without checking to see if you’ll be able to pay back the loan. No-credit-check loans can be obtained from banks and online lenders, the application process for these loans tends to be fairly simple, with a fast delivery of the funds as well.
The loan amount can range from small amounts like $100 or up to several thousand dollars and they’re usually paid back in equal, fixed installments over a set amount of months or years. In some instances an add-on such as credit insurance is added to the loan which may increase the payment per month. And lastly, some lenders demand direct account information to your bank account so the payments can be automatically withdrawn.
Why Do You Need a No Credit Check Loan?
You may be asking yourself why you may need to take out such a loan? Well, the answer to that question is that life has a way of throwing unexpected events in your path that you couldn’t have planned for financially. Say your pet is injured or needs veterinary care the cost of varying services from a vet can be large, and often the life of your animal depends on receiving the care rather quickly.
In this instance, you may have to apply for a no credit check loan to cover the cost of the bill. Or, say your vehicle has one or two flat tires, getting new tires installed and mounted is the obvious course of action but you weren’t planning on having to put two new tires on your vehicle and you need your vehicle to go to work every day. This again is another instance where getting a loan quickly is an even quicker turnaround of receiving the funds as many things depend on your ability to go to work and earn an income.
Types of No Credit Check Loans
Here is a list of the various no credit loans you can obtain:
- Payday Loans: These loans are a loan for a relatively small amount that is normally lent at a high interest rate on an agreement made between the lender and borrower that the loan will be paid in total when the borrower receives their next paycheck. One thing note is that many of these loans are predatory in their terms so make sure you do proper research when taking out such a loan, as well as ensuring you will have enough money the next paycheck to pay back the loan.
- Cash Advances: A cash advance is the taking out a short-term cash loan at a bank or ATM by using your credit card as a funding source. Now unlike a normal cash withdrawal from your bank account, a cash advance is something that must be paid back to the lender or in this case the credit card company in which the cash advance was taken from. It more or less is using your credit card to purchase cash as opposed to buying goods and services.
- Credit-Building Loans: A credit-building loan is when a person takes a loan from a financial institution such as a local credit union or community bank and the money loaned is deposited into their account. The borrower then makes monthly payments on both the principal and interest rate, those payments are then reported to credit bureaus anywhere from 6 to 24 months. Once the loan is paid off, you get the month from the account. The best way to think of these are instruments to help build credit and create a small savings.
- Low to no documentation loan: Loans such as these (home or auto loans normally) allow the potential borrower to apply for the loan while providing very little information in regards to their employment, income or assets.
MoneyLion is a financial platform that works with a wide range of consumers. It’s unique in that it offers a loan known as the Credit Builder Loan. This is a membership-based loan to aid those with poor or no prior credit build credit while saving money at the same time.
The membership comes with a competitive interest rate, free credit monitoring, access to 0% instant cash advances and rewards for the price of $19.99 per month. MoneyLion’s CreditBuilder Loan is available with no initial credit check as they offer installment-type loans up to $1000.
Once you’ve linked your MoneyLion account to your bank account, a loan offer will be displayed on your dashboard. If you’re denied membership, MoneyLion recommends that you try linking a different bank account and double-checking that your personal information is correct and matches the public record.
If you choose to accept the loan that is offered, it is distributed in 2 parts. A portion is released the moment you’re approved, and the rest of the amount of the loan is saved and only released when the entire loan amount has been paid off. If you have a higher credit score, a larger portion of the loan will be disbursed immediately. The remaining funds will be kept in an interest-earning Credit Reserve Account in your name.
Now that you have a basic understanding of the different types of no credit check loans and how they operate you can make better informed decisions on if loans of these types are best for you. If you wish to know more, or want to delve further into the personal finance landscape head over to Benzinga for a wealth of personal finance articles and information.
Frequently Asked Questions
Can I get a loan with no credit check?
Yes you can, such as from local lenders or a financial platform like MoneyLion.
Do payday loans require credit checks?
No, normally they don’t require a credit check. Normally all that is needed is an identification card, a bank account in good standing and a reliable paycheck.