There’s a ton of information available about loans on the internet. Some of it’s good; some of it’s bad. The problem that many potential loan seekers have is in separating what’s credible from what’s just pure garbage. This is especially true when you’re looking for quality information about loans with bad credit and no credit check with no fees.
One thing I’ve noticed, among hundreds of financial sites, is that everybody’s trying to sell you something. That’s true of any business sector but it’s especially prevalent in the lending industry. There’s nothing inherently wrong with trying to pitch your services, but there are some lines that should never be crossed. One of those lines is providing incomplete, skewed, and in some cases fraudulent information. But I find this is so often the case among lenders pitching no credit loans.
You deserve reliable information and I’m going to give it to you. If you have bad credit and want access to a loan that doesn’t require a credit check, where you also don’t pay any fees, I can tell you that you’re in for an uphill battle. Deals that advertise all of those conditions are often scams. Below are five facts you need to be aware of before you start shopping for these kinds of loans.
1. No Reputable Lender Doesn’t Care About Your Credit
The first fact to know is that if a lender says they don’t care about your credit, they’re probably either lying or they know that they can trap you in debt. I have yet to find a quality lender that doesn’t consider a potential borrower’s credit at all.
Why Should Credit Matter?
In the world of lending, the risk of a loan is a big concern. Since lenders give out potentially large sums of money, they want to ensure that they get it all back. The primary way they determine how likely you are to pay back your loan is by checking your credit score. A lender saying they don’t care at all about credit is the same as saying they don’t care about risk.
Even at Loans Now, where we specialize in providing great bad credit loan options to folks from all walks of life, we care about credit. It’s why, even though we don’t check it ourselves, we require you to give us your credit score. It’s also why you have to have a score of at least 450 to use our service. We’re fine with taking risks in order to help people afford what they want. It’s what makes us so passionate about our business. But we have an established amount of risk that we’re comfortable with. It’s so we can ensure we’re providing the best service we can.
Does This Mean That There Are No Safe No Credit Check Loans?
There are some safe options out there that you can take advantage of but there aren’t many of them. There are far more dangerous no credit check options than safe ones.
2. They Carry Higher Rates
Even if a lender will take a chance on you by not checking your score, you can believe that they’ll compensate themselves for taking that high risk. They do this by charging extremely high rates.
What Are the Average Rates?
While rates vary widely from lender to lender, the Consumer Finance and Protection Bureau stated that the average APR for a no credit check loan is around 200%. To put that in dollars, that would mean paying back $300 total against a $100 loan. Compare that to a bad credit loan where even the most high-end APR averages 36% and it’s easy to see why no credit loans are so risky.
3. They Target Desperate People
According to a study by the Pew Charitable Trusts, over 12 million Americans spend more than $7 billion on payday and other no credit check loans each year. Of those, the majority were college students, renters, divorced people, and people with little or bad credit. Notice a trend? Many of these groups are usually under financial hardship and desperately need money.
Many No Credit Lenders Use Desperation as a Weapon
The reason no credit check loans are so dangerous is that they sound so appealing. They capitalize on your desperation and tell you the things you want and need to hear, such as:
- Your credit doesn’t matter
- It’s easy to apply for personal loans with no credit check and be approved
- You’ll get your money quickly
- It’s safe to use
- We won’t turn you away
When you’ve spent so much time and effort with normal lenders, only to be turned down because of your credit, these are exactly the kinds of things you want to hear. The problem is that many of these promises are lies.
4. Your Credit is Still at Risk with a No Credit Check Loan
You might think that a lender promising not to check your credit doesn’t carry much risk to your credit score, but you’d be wrong. While it’s true that no credit lenders don’t require a score to give you money, their loan has a very high potential to wreck your score regardless.
What’s the Risk to My Score?
The typical scheme that bad lenders employ goes like this:
- You borrow the money with absurd interest rates and fees applied
- You’re only given two to four weeks to pay it back
- You can’t make your payments and end up defaulting on the loan
- The lender extends your loan, adding late fees and additional interest
- Steps 2 through 4 repeat themselves indefinitely
At this point, you’re trapped in a cycle of debt. Not only that, but your missed payments are often still reported to the credit bureaus. This will cause your score to plummet, leaving you in worse shape than when you started.
5. There Are Safer Options Available
No matter how bad your credit is, or how desperately you need money, never buy into the lie that no credit check loans are the only option left open to you. There are plenty of other options to get money fast.
A Bad Credit Loan
Unlike the majority of no credit check loans, there are many options for bad credit loans that are safe to use. Your primary fear is probably that a credit check will get you denied or cause your score to drop. Know that not all lenders require an immediate check or make a hard inquiry.
Like I mentioned before, Loans Now never checks your credit ourselves – we give you the tools to check it yourself for free. A check on your own credit will never cause your score to drop. Our process is also completely free, and you’ll never pay us any fees.
Bad credit loans also work at the same speed as no credit check loans in many cases. They typically advertise that you’ll have your money the next day. Bad credit loans can get your money to you in 24 to 48 hours. Plus, most no credit check loans cap at around $500. Bad credit loans can go as high as $70,000.
A Credit Union
Credit Unions offer loans without charging an absurd interest rate, and often without checking your credit. However, you do have to be a member of the union to qualify for loans, and gaining membership can be difficult.
An Advance on Your Pay
Though it may be a stretch, don’t ever look at a no credit check loan without talking to your employer first. Depending on the amount you need, your boss may be willing to offer you either a pay advance or a small loan for you to pay back. Good employers want to retain their best employees and keep them happy. If you’re struggling financially, your employer may be willing to help.
That being said, this is a long shot. It definitely won’t fly in a corporate setting and may not be feasible even in a small or family-owned business. But you have nothing to lose by asking and it’s certainly better than defaulting to a shady loan to get money.