No matter how quickly you need the cash, think twice before getting a loan without a credit check. Why? Because they are potentially as predatory as payday loans and can trap you in a cycle of debt for years. These bad credit loans – also known as no-credit installment loans – come with annual percentage rates of up to 400%. This is way above the rates you’ll find at credit unions or with credit unions and banks.
In addition to no credit checks, these loans have no gauge of your repayment capacity, and lenders can easily access your bank account for automatic withdrawals. Loan amounts range from $ 100 to several thousand dollars. Borrowers typically make a lump sum payment. But the exorbitant interest rates on an online loan make it worse in the long run.
The loans are usually marketed with a promise of the same or next-day delivery of funds. Some loan providers also add additional products like credit insurance or charge a fee that further increases the cash advance cost.
If you need easy money, you may be able to find alternatives to loans without a credit check by speaking with credit counselors, religious organizations, and the non-profit community. Here are other options:
Even if your credit is low, consider getting a personal loan from these institutions. Most credit unions offer small loans of $ 500 or more, and they are often willing to work with you to make payments affordable. Many also have credit cards or starter loans to help you build credit. The interest rate charged by a federal credit union is capped at 18%.
Known as PAL, these loans from credit unions help small borrowers avoid the debt trap created by traditional payday loans.
Financial institutions for a payday loans think of borrowers with poor credit, even with scores below 600. Other direct lenders offer loans after considering factors other than credit scores, such as employment status and income. However, beware of the high fees which increase the costs.
Installment loans without a credit check are costly forms of credit. Only consider these loans after ruling out other options.
Jeff Gitlen is a graduate of the Alfred Lerner College of Business and Economics at the University of Delaware. Gitlen has spent the past five years writing and researching on personal finance issues which include credit cards, student loans insurance, and other. His writing has been featured in top news publications among them are Bloomberg, CNBC, Forbes along with Market Watch.