Opting for any kind of loan without a thorough financial knowledge is a potentially catastrophic practice. Especially for no credit check loans. Before you apply for no credit check loans, do yourself a favour and make sure you’re familiar with some of the hidden traps you might fall into if you’re about to get your first loan.
The Most Crucial Must-Knows
Believe it or not, there is a good part in no credit loans
Well, your credit score will not be much of an issue. Even if your score is incredibly low, they will not verify it. Also, some of the creditors don’t even ask for collateral and, moreover, you can use the money you get on anything you want. When applying for the loan, no one will bother asking why you actually need it, as long as you are able to repay the full amount. And because the application process is not that complicated (compared to a bank), things will go a lot faster. It sounds like it’s too good to be true, isn’t it?
No credit check loans have higher interest rates
That’s a natural consequence of having a low credit score. It’s some sort of reassurance that you’ll stick to your repayments – because you can’t afford to accumulate penalties and debt. The interest is usually around 400% APR which is way higher than what you’d need to pay on a credit card or personal loan. In some cases, you can negotiate these interest rates, but they’ll still be a bit higher than those of a loan from a bank or credit union.
Payday loans are the worst no credit check loans
Whatever you do and no matter how desperate you are, you should refrain from applying for a payday loan. On one hand, the interest rate on it is incredibly high. Moreover, most of the times, lenders charge hidden fees. Another disadvantage is that, in the context of a payday loan, you can’t pay the sum you’ve borrowed in rates. You’ll have to pay back the lump sum you’ve gotten from the lender. Payday loans are usually handed to people by predatory lenders and that’s the main reason why people look for other alternatives.
Your credit score can drop even further
If you think that defaulting on a no credit check loan makes your credit exempt from dropping down even lower, think again. A credit bureau will eventually get the info that you’ve missed on your payments and will act accordingly. In the case in which the lender sends a team of collectors on your trail, they will also report to a credit bureau. The fact that a no credit check loan has no effect whatsoever on your credit score is a misconception. This has gotten plenty of people in trouble.
It’s better to be rejected than be indebted for life
Surely, lenders of no credit check loans have the liberty to reject some applicants on account of their low income. I think we can all agree that you shouldn’t get a loan unless you can repay it. There are many lenders who couldn’t care less about this. They give money to people who have low incomes precisely because they know they can flip them for profit when they start missing on their payments.
You will not get much money
Private lenders cannot afford to give you loans as big as a bank might do. Because they usually have a short term of repayment, the amount of money you could get is limited. If you are indeed in a desperate need of money and any amount works for you, then this is one of your best shots. But if you still have time to consider other solutions and your credit situation is not that bad, maybe you should spend some time browsing for other options.
There are a lot of scammers!
Because this type of loan requires so little information from its customers, many companies one can find online are actually scammers. Even if they cannot take money from you, they can steal your identity. They can apply for loans in your name, or use your personal information to create fake identity cards, passports, and other documents. Do not enter your personal details on any website that doesn’t look trustworthy. Check their website for testimonials, clear information about the company and who’s behind it, and what services it offers. If these are missing, it is a good idea to stay away from it.
Instead of spending hours surfing on the Internet, you can enquire on Bad Credit Loans and rest assured you’ll be taken care of properly. No credit check loans are great, but they often have a lot of strings attached that make them less pleasant. We hope this article helped you understand that no financial product is completely devoid of certain pitfalls.