No Credit Check Loans: Are They Worth It Or Should You Look Elsewhere?


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If you need money to cover an unexpected bill or if you need to borrow money but your credit is poor, you can consider installment loans or loans with no credit check. They can be a quick form of financing, especially if you choose online loans without a credit check. Used wisely, they could even help you rebuild your credit.

Before you sign on the dotted line, understand what the terms of the loans are, how they differ from soft credit check loans or hard credit check loans, and what will happen if you choose to take out a personal loan without verification credit.

What are no credit check loans?

A FICO score of 620 or lower is considered below average, which makes it difficult to obtain many conventional personal loans. You may already know that there are a variety of loan products that don’t require a credit check. These loans often require repayment within 15 to 30 days. Borrow with caution – interest rates can be called fees and can be as high as 400%.

Types of no credit check loans include:

  • Payday loans
  • Securities lending
  • Online loans without a credit check

Learn more about no credit check loans to see if this one is right for your financial situation.

Payday Loans No Credit Check

Payday loans are loans where you write a check for the loan amount with a fee included, and then the lender gives you the money for the loan. At your next payday or within a specified time, you must report the amount of money to the lender and you will receive your uncashed check. If you fail to bring the money back in time, your check – along with the onerous fees – will be cashed. You will always pay a hefty amount in fees, so try to find a payday loan alternative before deciding on one.

Securities lending

Title loans use a car title as collateral for the loan. You may be able to borrow a larger amount of money than with a payday loan, but payment is still due within 15-30 days. If you fail to repay the money, you could lose ownership of your vehicle.

Online loans without credit check

Online installment loans require you to make monthly or weekly payments until the loan is paid off. Your payments can be interest only with a lump sum payment at the end for the remainder of the loan.

Advantages of personal loans without credit check

One of the biggest advantages of a no credit check loan is that the process can be completed very quickly – often within minutes or hours – because the company won’t be performing a credit check on you. The only requirements are your identification and proof of income. People often turn to these types of loans when they are in dire financial straits and have no other options.

Disadvantages of personal loans without credit check

One of the disadvantages of these types of loans is the higher interest rate you end up paying. The interest can reach 400% APR, which is much higher than what you would pay if you were borrowing money on a credit card or taking out a personal loan.

Additionally, people can get trapped in a cycle of resorting to payday loans as they have to keep using them to cover next month’s bills as the full amount is due at the start of each pay period. No credit check online loans can require low monthly interest payments, with a large lump sum payment at the end. If the borrower cannot repay it, he can borrow the money again and restart the cycle.

The example below shows how much more you might have to pay with a no credit check loan compared to other options. Imagine taking out a two-year, $3,500 loan calculated on a standard amortization schedule. Loan Option A and Loan Option B are both from lenders considering credit; loan option C is from a no credit check lender.

Borrower credit APR monthly payments Total payments
Excellent 6% $155.12 $3,722.93
Poor 36% $206.67 $4,959.98
No credit check required 400% $1,167.84 $28,028.12

Alternatives to No Credit Check Loans

Although no credit check loans seem like the best solution in an emergency, they should be avoided, especially if you need them periodically. Consider the following alternatives.

Personal installment loan

One option is to apply for a personal installment loan with a credit check at your bank or online. Even if you have bad credit, personal installment loans offer better rates than payday loans.

Loans from friends and family

You can also borrow money from friends or family. However, make sure you can repay a loved one to avoid putting them in a bad financial situation and straining the relationship.

Credit card

Having a credit card as a backup in a financial emergency can be a lifesaver. Using a credit card could cost you less in interest and allow you to make payments over time with less exorbitant interest rates.

Payment Plans

Before taking out a loan, check to see if a payment plan option is available. Some companies and many hospitals are willing to work out a payment plan with you so you can cover unexpected bills without taking out a payday loan.

Final take

If you decide to research installment loan options online, look for a low interest rate. A loan with a credit check will come with a better interest rate than ones that don’t require a credit check, making it easier for you to repay the loan and get out financially. Finally, set a budget to control your expenses and try to set aside money each month to cover emergencies.

Cynthia Bowman contributed reporting for this article.

Our in-house research team and on-site financial experts work together to create accurate, unbiased and up-to-date content. We check every stat, quote and fact using trusted primary resources to ensure that the information we provide is correct. You can read more about GOBankingRates processes and standards in our Editorial Policy.

About the Author

Miriam Caldwell is a North Carolina-based personal finance writer. Miriam has written about everything from budgeting to managing your money during your marriage. With over 12 years of experience, his writing has appeared online at TheBalance.com, About.com and BlissfullyDomestic.com.

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