Having a good credit history is important when seeking loans, as it is the primary factor that lenders consider when deciding if a person is creditworthy.
However, it is no longer a hindrance, thanks to no-credit-check loans. With these loans, your credit score stops being the leading signal for your creditworthiness but other factors like income levels and employment status. Read more to learn everything you need to secure a no-credit-check loan and the steps involved.
What are No Credit Check Loans?
A no-credit-check loan is a special kind of loan option that allows borrowers to get approval for funding without subjecting their information to a hard credit check. Instead, lenders who offer this type of loan only perform a soft pull on your credit details without affecting your credit history.
No credit check loans are best suited to individuals with a poor credit score or no credit rating and who would have otherwise been ineligible for loan offers. However, discovering the best deals for no-credit-check loans can be difficult, but WeLoans has listed some of the best no-credit check loans on its page for your needs, you can visit its website to find out more.
3 Types of No Credit Check Loans
There are different types of loan packages where lenders may allow only a soft credit check before granting the loan application.
Caroline Banton has written some articles related to no-credit-check loans, you can turn to her page to find out more about this kind of loan. For now, popular examples of no-credit-check loans include:
1. Payday Loans
Payday loans are designed to help people cover unexpected financing needs and typically have to repay on their next paycheck. Payday loans are generally short-term as the time frames are commonly a month or a bit shorter. Because they are short-term loans, the amounts involved are also small (commonly between a few hundred and a few thousand dollars).
Payday loan don’t often require a credit check for you to secure approval because some lenders tend to focus more on your income and other factors like your employment status. However, this lack of credit checks means the interest rates tend to be high since lenders are taking more risk offering you the loan.
2. Title Loans
Title loans are a type of no-credit-check loan where you offer the title to your vehicle as security. They are also short-term loans, and although the specific duration depends on the lender and state laws, the typical time frame is around 30 days. When you take on a title loan, you have to hand over the vehicle’s title to the lender for the course of the loan, and you will only get it back upon the full repayment of the loan.
The fact that there is already security informs why the lender doesn’t conduct strict credit checks since the collateral means that the loan becomes less risky.
The benefits include access to typically larger funding with no need to check your credit ratings. However, failure to repay may lead to the lender repossessing your vehicle.
3. Installment Loans
If you want a no-credit-check loan that offers larger sums and longer repayment periods, consider installment loans. Installment loans involve getting a lump sum which you are to be paid back, usually in fixed payments. Because of the longer time frame, installment loans generally offer lower interest rates.
Installment loan options include secured and unsecured. For the secured option, you need to put up an asset (vehicle or property) as collateral, while for the unsecured type, there are no such requirements. While there are no specific time frames, installment loans may last several months or years.
How Do No Credit Check Loans Work?
While no-credit-check loans do not require any credit check, lenders apply other criteria when reviewing loan applications. While the set of requirements that lenders stipulate differ from one lender to another, they typically consider factors like income, employment status, debt-to-income ratio, and other financial details. So, essentially you need to have a job or source of income and have documents to prove such.
The loan amount and interest rate for a no-credit-check loan can vary depending on the lender and the type of loan. However, most no-credit-check lenders tend to offer loans with smaller amounts than what you get with traditional credit packages.
This is because lenders think that offering to persons without checking their credit history is risky, and thus, they don’t want to offer large amounts should the borrower face difficulty paying back.
Similarly, the interest rates are often higher than traditional loans, since lenders are compensating for the increased risk.
The repayment of a no-credit-check loan differs based on the specific type of loan. For instance, if your no-credit-check loan is a payday loan, you most likely will have to repay when you get your next paycheck.
However, for installment loans, you are to pay back in monthly bits spread over multiple months or years. Note that in addition to these repayments, the specific no-credit-check loan you accessed may require you to pay some fees. For instance, payday loans require you to pay origination fees, processing fees, late payment fees (if you miss payment schedules), etc.
Steps for Securing a No-Credit-Check Loan
Getting a no-credit-check loan shouldn’t be a tedious process if you are applying through a broker, which offers a step-by-step guideline below:
Submit an Online Application
Provide your personal and financial information in an online form available on the broker’s website. This form will require your name, contact details, and loan amount. Several lenders in the broker’s network will reach out to you with deals.
Choose From Comparable Offers
You then need to compare all of the offers you receive from potential lenders. More specifically, check the loan terms, repayment period, and annual percentage rate. Select one that perfectly meets your needs and accept the loan offer online.
Get Your Funding
Sign off all agreements and supply the needed documentation to make your loan application complete. You’ll receive your funding as soon as all of the above is complete.
The loan type you apply to will determine how quickly funds land in your account. But for most lending partners you can allow one or two business days to receive your cash.
No-credit-check loans present a rare opportunity for persons with poor credit ratings to access financing without their credit history being a hindrance.
Fortunately, they are of varying types, including payday and title loans for ultra-short-term credit and home equity and installment loans for longer-term purposes.
We explain all these types in detail while outlining the steps to securing a no-credit-check loan. Every borrower can get a no-credit-check loan from a broker based on personal financial requirements.