A credit check is a common practice before anyone applies for a loan. However, there are people who do not have a credit score or have a poor credit score which will prevent them from getting along with a good interest. If someone needs the money urgently, they cannot wait for their credit score to get better over time.
This is why there are several lenders who do not look at the credit score before approving certain applicants. Generally, lenders look at credit history which might be possible for a college graduate or someone who has never taken a credit card.
But there is no need to worry for an individual who does not have a significant credit history. Many personal loan lenders will consider such applicants depending on other factors like loan amounts and term length. There are a number of borrowing options to consider when it comes to no credit checks before approval. In this article, we will outline different types of loans that do not require a credit check.
What are the Alternatives to No Credit Check Loans?
No credit check loans are very popular but they have certain drawbacks. Within no credit check loan the lender does not review the credit history and issues the amount on a very high-interest rate. So, while it may be necessary for an emergency, one should always try to find an alternative to save some extra bucks.
Paying extra interest is expected in such types of loans because the lender is taking a big risk while entrusting you with their money. They have many additional conditions that need to be followed like short repayment periods. At the most, you can only borrow a few thousand dollars or even less depending on the lender.
Because of the short cycles of repayment, it can be very difficult for the borrower to repay the main amount as well as the interest. The debt can keep on building which creates financial difficulty for any individual. It is very important to look for alternatives that are easy on the pocket and allow for more convenience.
Payday Alternative Loans
Payday Alternative Loans or PALs are short time loans offered to an individual by federal credit unions. It is especially meant for emergencies and work much like a traditional payday loan. These have an interest rate of 28% with a possible application fee for the processing of the details. PAL I deals with amounts ranging from $200 to $1000. If you require more information on payday loans, make sure to visit website of credible lenders.
The duration of repayment can be one to six months. It is important for the borrower to be a union member for at least a month before applying for a loan. PAL II has an upper limit of $2000 with the term duration being anywhere between one to twelve months. One does not need to wait for one month as a union member to apply for this loan. They just have to sign up as a union member beforehand.
Online Lenders
Online lenders are life savers for an individual with no history of borrowing. They do not look at the FICO score. Different online lenders have different parameters of analysing what makes an individual qualified for a certain sum of money. Some of the key factors an online lender will consider include the current employment status, the outstanding debt, and the current salary a person is drawing.
Since the score does not look that it does not become important but there is a minimum FICO score requirement for many of these companies. So even if you have a bad history make sure to meet the eligibility criteria before considering online borrowing.
Credit Union Loans
There are many credit unions that can help an individual in case of emergency. This type of lending is done through a self-help co-operative group who pool their savings. They use these savings to help out any member in need of urgent cash. It qualifies as a personal loan with the maximum cap being about $500 or more.
Rather than looking for the landing history the union will look at the history of an individual as a member of their co-operative. It has significantly less interest than other alternatives mentioned here because the financial condition of the member is considered. The maximum interest rate charged for this type of borrowing is 18%.
Cash Advance Apps
There are many mobile applications specifically made for giving cash advances. The upper limit for these apps is very low capped at a few hundred dollars. These applications link the term duration to your pay day and need to be repaired as soon as you receive your salary. They do not offer any interest but may have a subscription for which an individual needs to sign up.
Buy Now Pay Later Companies
Imagine an essential item in your house broke down and you need to buy it without having all the cash at hand. In such a case buy now pays later companies come in handy. They break down the total amount an individual has to pay in smaller portions over a course of a few months or years. One does not need to look at the borrowing history for approval.
There is typically a free approval limit for each customer that one can take advantage of. However, it is recommended to only use the services of this company for urgent expenses and not usual shopping. It can be damaging for your financial situation if you overspend with BNPL companies.
The Takeaway
Different types of personal loans are the most common types of credit people seek for a variety of expenses. Make sure that you are reading all the terms and conditions before signing up for any kind of loan. It is also important to try to maintain a good credit score in the future and not rely entirely on these alternatives.
