Lately, it has become easier to receive an installment loan with no credit check. However, receiving an installment loan with a credit check is simplest and likely cheaper because this demonstrates the borrower’s financial responsibility.
Why Do Lenders Charge Interest & Fees On Loans?
When a lender gives a borrower a loan without a credit check, they are unaware of the borrower’s financial situation and history. This means they are taking a chance on the borrower to repay a large sum of money.
Because there is no knowledge of the borrower’s financial history, the lender has to create larger fees and penalties to cushion themselves if the loan is not repaid in time, which causes downfalls in seeking out this type of loan.
When used responsibly, this type of loan can be very beneficial for a financial emergency in a short matter of time.
Is It Possible to Receive an Installment Loan With No Credit Check?
Simply put, yes. There are a lot of online lenders who are willing to approve you for a loan without a credit check. These loans are a few thousand dollars or less, typically used to cover an emergency or bridge an income gap.
This type of loan is a good option for people who need cash fast, especially if they have a low or non-existent credit score.
But, the cost to pay back these loans may not be viable for your living and financial situation, so ensure this type of loan is right for you.
Drawbacks to a No Credit Check Loan
The biggest downfall of an installment loan that does not have a credit check is that these loans can have triple-digit interest rates. Since the lender did not know your credit history and did not perform a credit check, they must balance the risk of lending to you by charging an extremely high interest rate.
Additionally, the repayment period for these types of loans is short and only lasts a few weeks or months. These short repayment periods make it difficult to repay the loan on time and can trap borrowers in a cycle of debt.
These drawbacks make no credit check loans risky for the borrower, but remember that the lender is also risking the loan with you as they do not know your financial history.
Handle Your Installment Loan With No Credit Check Correctly
As mentioned above, there are major drawbacks to an installment loan that does not have to be approved with a credit check.
The most important thing to do before applying for a loan that does not require a credit check is to research potential lenders and their typical interest rates for these loans. Take your time comparing these different lenders and have meetings with your top choices before you borrow the money.
Additionally, you need to make a plan to repay the loan before you ever borrow the funds. Since these loans typically have extremely high interest rates and a short repayment period, it would be best to pay back the loan immediately. You do not want to be caught in a cycle of debt, so ensure you are ready for this risk.
Installment loans that do not require a credit check can be very handy when funds are needed quickly, and the borrower does not have a positive credit history.
However, because the lenders are taking a risk on you, these loans have very high interest rates and short repayment periods. They’re best used as a last resort once other means of funding have been exhausted.
Ensure you have a plan in place to pay back the loan before you borrow.
Ready to Receive a Loan?
If you are prepared and ready to discuss the possibilities of a loan without a credit check, and you live in Texas, Kansas, Missouri, Tennessee, or Wisconsin, start with us at Cash Link USA. Each day we help borrowers get out of negative financial situations.
Learn more about Cash Link USA and installment loans. We would be happy to answer any questions you still have about receiving an installment loan with no credit check; contact us today!