No Credit Check Loans: Where to Get Them & How They Work
A no credit check loan is a type of loan that does not require a hard inquiry into your credit report during the application process. That means your credit history is not a factor in approval for the loan. Loans with no credit check do not guarantee approval, though. Whether or not you qualify depends on other things, like income or collateral to secure the loan, instead.
No credit check loans might seem too good to be true, and they pretty much are. They tend to be predatory loans with extremely high interest rates and fees. Most also require you to put up something of value, such as your next paycheck or your car’s title, in order to get the loan.
If you have bad credit, it’s true that you won’t qualify for most unsecured loans. Typically, you’ll need a credit score of 600-660 at a minimum. But there are plenty of reputable banks, such as Wells Fargo and PNC, that offer non-predatory secured loans for people with bad credit or better. Or, if you enlist the help of a co-signer, you could use their credit to qualify for an unsecured loan instead.
Below, you’ll find information on what kinds of no credit check loans are available, along with their features and the risks involved. You can also see some alternatives that will help you borrow with less risk and better terms.
Where You Can Get a Loan With No Credit Check
There are several different places where you can get a loan with no credit check. They include payday lenders, pawn shops, auto title lenders, and friends or relatives. None of them are ideal.
|Lender||Why It’s Dangerous|
|Payday lender||Extremely high interest, cuts down your next paycheck|
|Pawn shop||High interest, could lose your property|
|Auto title lender||Extremely high interest, could lose your car|
|Relatives or friends||Could hurt your relationship if you default|
Payday lender: Many payday lenders advertise having no credit check for approval. But these types of lenders are incredibly predatory. They give you a sum of money, usually $500 or less, which you must pay back using your next paycheck. But you must also pay large fees that are typically equivalent to a 400% APR. So not only will you owe far more than is reasonable in finance charges, but your next paycheck will already have a big chunk taken out of it. Avoid payday loans at all costs.
Pawn shop: Pawn shops have come more into the public eye recently with the host of reality TV shows based around them. When you “pawn” something valuable, the lender gives you 20% to 60% of its value in cash as a loan. The shop keeps that item but does not sell it for a specified period of time, usually several months. If the owner of the item pays the loan back, along with monthly interest (2% to 25% or more, depending on the state), they get their item back. If not, the pawn shop can sell it.
Auto title lender: These lenders offer loans for which you have to use your auto title (the certificate that makes you the legal owner of a vehicle) as collateral. In return, the lender lets you borrow up to 25% to 50% of the value of the car, to be paid back in 15-30 days with a fee equal to as much as 25% of the amount you borrow. These loans are $100 to $5,500, on average (sometimes $10,000+), according to the Federal Trade Commission.
If you are unable to pay the loan back within the specified timeframe, the lender may “roll it over” into the next month. This gives you another month to pay it back, in return for another month’s worth of fees. Eventually, if you roll it over multiple times, the lender may take possession of your vehicle. Avoid these loans.
Loans from relatives/friends: A family member or friend doesn’t have the capability to perform a hard check of your credit. And they may be willing to give you a loan even if your credit is bad. However, it’s important to handle such a loan as professionally as you would one from a bank.
Scams: Sadly, some “no credit check loans” out there are just expensive scams. If they ask you to make any kind of upfront payment before you receive your loan, that’s a big warning sign. If they won’t disclose their fees, that’s also a red flag. You should do research on the company to find out if they’re actually a legitimate business – are they registered as a business in your state, for example? And if their website doesn’t have “https” (meaning secure) in the URL, you don’t want to put in any personal information.
Alternatives to No Credit Check Loans
It’s generally best to avoid no credit check loans, as often you’ll end up paying absurdly high interest rates. However, there are several ways that even people with bad credit can get a reasonable loan.
- Secured personal loans: Rather than trying to get a predatory loan from a sketchy lender that will charge you enormous interest rates, go with a secured loan from a well-established lender. Some major banks that offer secured personal loans include Wells Fargo, PNC, Fifth Third Bank and KeyBank. While the lender will check your credit, you should still be able to get approved with bad credit because you will have to put up collateral.
- Cosigner: A cosigner is someone who takes responsibility for your loan. The lender uses that person’s credit and income to decide whether or not to approve the loan. And if you can’t afford payments along the way, the cosigner is on the hook to pay off the balance. If you can find someone with good credit and a steady income who is willing to cosign, then you should have no trouble getting approved for an unsecured loan.
- Credit cards: People with poor credit have a few credit card options. The first is to open a secured credit card, which will give you the highest approval odds but won’t allow you to actually borrow any money. Or, you could opt for an unsecured credit card for bad credit, which won’t require a deposit but will charge high fees. Lastly, you can become an authorized user on someone else’s credit card. That person may allow you to borrow from their credit line.
Before you consider any kind of no credit check loan, it’s a good idea to first make sure you really have no chance of getting a regular personal loan. Your odds may actually be better than you think, as there are plenty of personal loan providers that will consider people who have bad credit.
You can use WalletHub’s free personal loan pre-qualification tool to check your odds of approval with multiple lenders at once (and see your potential rates). Pre-qualification only uses a soft credit pull, so it will not affect your credit score at all.
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