No Credit Check Loans
No Credit Check Loans
For the most part, if you want to borrow money, you will need to submit to a credit check. Lenders need to make sure that they know who they are loaning money to and that they can be reasonably confident that the borrower will be able to pay the money back. Credit checks serve several purposes:
- Confirming the identity of a person
- Confirming how much a person currently owes
- Confirming the status of accounts, and any missed payments or defaults
Credit checks are no bad thing. Credit checks are an important step in ensuring the affordability of a loan. But what about people with bad credit who have fallen on hard times, and sorely need a loan in order to get back on their feet? There are many circumstances where someone who might not qualify for a traditional loan would need to borrow money and has both the means and intent to pay that money back. No credit check loans exist for exactly that purpose.
How Do No Credit Check Loans Work?
No credit check loans are loans that are offered for a small loans, over a short period of time, without requiring the borrower to submit to a full credit check. Lenders will typically still do a ‘soft’ check to confirm the identity of the borrower, but they will not take into account the user’s credit score, and they will not do a full, deep check that might impact on the borrower’s credit score.
No credit check loans are usually a form of payday loan. They are for relatively small sums of money, and the money is repaid back quickly – usually in a matter of a few weeks. The lender will have their own eligibility requirements. Example eligibility requirements might be:
- Being a resident or citizen of Australia
- Having valid email and telephone contact details
- Holding an Australian bank account
- Having regular, stable income over the last three months
No credit check loans are available for people with bad credit, even if they are unemployed. As long as an applicant has some income, whether from unemployment benefits, sickness benefits, or even a pension, that should be enough for them to be able to demonstrate the ability to repay a loan.
Are No Credit Check Loans Legitimate
No credit check loans can be legitimate. Would-be borrowers should pay attention to the lender and do their own due diligence. No credit check loans will usually be for relatively small sums of money, repaid quickly, and with a high charge for the borrowing. The annual equivalent rate for a no credit check loan can appear to be huge, since the amount that the person repays includes a significant charge. It’s important to understand, however, that lenders who are offering loans to people without performing in-depth investigations into their credit history are taking a risk, and need to mitigate that risk.
Traditional lenders expect to see near-flawless credit histories. To borrow thousands of dollars over a period of months or years, the lender wants to know that the borrower is capable of making repayments on time for that long. Stability in terms of regular repayments, not maxing out credit cards, not defaulting on agreements, and borrowing responsibly/only when needed for a major purchase, is a must.
Even companies that claim to offer a loan with no credit check will still want to confirm your identity, and usually do this with what is known as a ‘soft check’. Any company that claims to offer a loan without performing any checks at all is most likely doing something shady, and you could be putting yourself at risk by working with such a company.
There are, however, legitimate companies that offer loans without performing a detailed check. So, if your credit score with the main credit reference agencies is poor, working with a payday lender or a cash loan company that uses criteria beyond just your credit score could be the most sensible course of action. Some people have a low score, or no score, because they are young, have moved around a lot, or have just never felt the need to borrow money. In those cases, a loan with no credit check may be an option as a way of showing that they are able to manage credit effectively, building a credit score so that they can access credit from mainstream lenders at some point in the future.
Loans For People With Bad Credit
Lenders who are willing to loan money to people with bad credit operate in what is known as the ‘sub-prime’ market. These lenders help people who are facing an emergency and who would not otherwise be able to borrow money. Offering these loans is a significant risk to the lender, but they can reduce this risk with their lending criteria.
Payday loans and small cash instalment loans cap out at much lower levels than standard loans. Most loans are for just a few hundred dollars, or at most $5000. Payday loans are repaid within days or weeks, and even instalment loans are unlikely to run for more than two years. Because the loans are repaid quickly, this means that it is unlikely that the borrower’s circumstances will change.
Loans for people with bad credit usually require a direct debit to be set up, so that the repayments can be collected automatically. This reduces the risk of the borrower defaulting. The loans carry hefty charges, so the people who do repay their loans are, in effect, covering some of the risks of those who default.
If you are someone with a poor credit rating, and you need money for an urgent purchase or to pay an unexpected bill, taking out a no credit check loan is a viable option. It is, however, something that should be thought about carefully, since the loan will need to be repaid in a short period of time. If you needed to borrow money, this likely means that you didn’t have savings. If your reason for not having savings was that you couldn’t afford to save, can you really afford the loan?
Should I Take Out a Bad Credit Loan
The decision to take out a no credit check loan is a personal one that should be made after careful consideration.
If you need a loan to cover vet or medical bills, fix a broken car, or purchase urgent equipment for work or school, then borrowing money makes sense. It is that sort of service that makes no credit check loans in Australia so important. For people who are struggling, no credit check loans can often be a lifeline, allowing them to replace their washing machine so the kids can go to school with clean uniforms. Letting them fix their car so they can still get to work and earn money to pay the bills. Allowing them to keep the electricity supply going so that they can cook, use air conditioning, and generally look after themselves.
Short term, fast access, easy to get loans are vital to a certain subset of the population.
If you fall into that category, then take a look at the loan tool offered here at MyBorrowing. Work out how much you need to borrow, and how much you can afford to repay. Play with the sliders to see what sort of loan might be accessible to you.
Are No Credit Check Loans Affordable?
No credit check loans usually have a fee that is charged at the start of the loan. If the loan is a payday loan, then this fee is often the only ‘charge’. With instalment loans, on top of that initial fee there may be a monthly interest charge.
When considered in absolute terms, the interest charged on a no credit check loan will be more than the amount that is charged on a loan from a mainstream lender, and likely more than the interest on a credit card too.
However, life is not as simple as “those loans are more expensive, so they are bad”. If you are borrowing money to pay a plumber to fix a leaking pipe, the interest paid will most likely be a good investment compared to the alternative of allowing the leak to continue and then having your home or your appliances damaged.
If you are borrowing money to fix a car to go to work, the loan will leave you better off compared to the alternative of losing your job.
No credit check loans are not free money. They do need to be repaid, along with an extra fee. The lender will ask you questions about your income and expenditure to work out whether they think you can repay the loan on time before they offer it to you. For this reason, it is important that you provide honest and accurate answers to questions about your circumstances. The lenders will want to see evidence of your income, but if you misrepresent your circumstances you could land yourself in financial difficulty in the future.
Finding a Lender That Doesn’t Do Credit Checks
If you want to apply for a cash loan with no credit check, look at the loan finding tool on the MyBorrowing homepage. This tool will connect you with lenders that are likely to be good options for you given your financial circumstances.
If a suitable loan is available, simply fill out the application form, providing information about your address, the best way to contact you, and your income and expenditure, as well as any dependants that you might have. Lenders may ask why you want the loan, so they can better understand what is going on with your finances.
You will need to be able to show evidence of your income, so it is a good idea to have the relevant information to hand. Online banking statements are often suitable. If you have moved house recently, then you may be asked for information about your previous addresses.
The loan application process should take just a few minutes, after which the application will need to be processed. This should not take long, but depending on your circumstances the loan might need to be reviewed manually. A delay is not bad news, since lenders are looking to review your case individually, rather than declining it outright because of a poor credit score.
Once the loan has been approved, the payment will be sent directly into your bank account. All that remains is for you to repay the loan on time, and hopefully benefit from an improved credit score as a result!
To find out what borrow apply online on MyBorrowing and get approved for your same day cash loans.