No credit check loans are a new, quick-fix loan offered to borrowers with low credit. They promise not to check your credit score, which means not only will they not take a bad score into account and use it to block your loan application, but they also won’t leave soft or hard credit check enquiries on your report.
Sounds good, right? Well, as the saying goes, “If something sounds too good to be true then it probably is”. These loans are almost predatory in nature and can be seriously destructive to your credit, potentially making a bad situation much worse. In this guide we will still look at the best no credit check loans out there, but we’ll also provide some much needed warnings and offer some alternatives as well.
The Issues with No Credit Check Loans
The biggest issue, and really the only issue with these loans is the huge APR they all charge. An average personal loan will charge you an APR of under 40%, even if you have bad credit (the APR can be as low as 5% if you have good credit). A no credit check loan, however, can charge up to ten times more than this.
This means that if you take out a loan for just $1,000 to be paid back within 12 months, you could be paying over $340 a month, compared to the $100 you would pay with a personal loan charged toward the higher end of the APR spectrum.
Most of these loans are small and are paid back within 1 month, but it’s useful to look at the bigger picture just to show you how ridiculous the interest rates are and how much trouble you can get yourself in if you miss repayments and/or extend the loan. To make that picture a little bigger, let’s scale it up: A $10,000 no credit check loan taken out at the aforementioned interest rate over the course of 5 years will demand monthly repayments of $3,300, which adds up to a total repayment amount that doesn’t even bear thinking about.
This is the real issue with no credit check loans and it’s an issue that should scare any borrower away. But we’re here to offering options as well as opinions, so here is a short list of the best no credit check loan options out there, followed by some alternatives.
No Credit Check Loans: LendUp
This provider is online-only and while there are some high interest rates initially, there are also some perks that allow repeat borrowers to reduce their interest rates over time. A high interest loan this month that is paid off quickly could result in a lower interest loan in months to come.
You can take out loans between $100 and $500 and there is a minimum lending period of 7 days and a maximum period of 31 days. The APR you are charged will depend on a number of factors and ranges from 235.42% to 625.71%. It doesn’t lead to particularly huge repayments if you manage to pay them off within the 31 days and there are opportunities to extend your loan if needed.
Of course, the more it is extended, the higher that total repayment amount will become. There are also small fees charged at the point of approval.
No Credit Check Loans: CashNet USA
This is a no credit check loan provider that takes a number of other things into account to determine if you are a good candidate for one of their high interest loans. You need to be 18 years of age and a US citizen and you also need a driver’s license, a job and a checking account.
If you tick those boxes then you pretty much have all you need to get one of these loans and you can do so in a matter of moues thanks to their quick signup process.
The loans go up to $1,000 and you have up to 31 days to pay them back. Unlike LendUp, there is no loyalty program to speak of and the high rates that you see when you first signup will be the same rates you pay on your second, third and fourth loan.
Alternative 1: Build Your Score
We know it’s easier said than done and we know that improving your score can feel like an uphill battle, but there are ways to make it easier. These include secured credit cards, disputes and consolidation. Take a look at our guide on How to Improve Your Credit Score to get some tips on how to do this.
Alternative 2: Credit Unions
Many credit unions will give you the option of getting a very small loan, even if you don’t have a great credit score. They exist to help you out and while the interest rates can be as high as 18%, they can’t go any higher (this is the cap) and this is a fraction of what you will pay with a no credit check loan.
Check with your local credit union to see if they can do anything for you and help you to avoid the dreaded high interest rates.
Alternative 3: Person-2-Person Lenders
These are online lenders that operate on a P2P basis. Someone has the money, someone else needs it, an agreement is reached and the money changes hands. It is as simple as that. Your credit score is taken into account, but they tend to place a bigger emphasis on other aspects of your financial life, including your job, your employment history and your income.
Alternative 4: Credit Cards
We have a few guides on credit cards here on DebtReviews. Make sure you read through the to find out if they can be of any use before you opt for a no credit check loan. If you have decent credit then you can look at our Best Reward Credit Cards. If not, take a look at our guide to Student Credit Cards.
Alternative 5: Friends and Family
If you are looking to take out a no credit check loan then you are either in need of a small lump-sum to help with bills or other small payments, or you need a significant amount of money. If it’s the latter, then you are making a huge mistake that you could be paying for forever. If it’s the former, then consider asking friends, family and even neighbors instead.
The people who love you will likely be willing to help you, especially if it means avoiding the ridiculous interest rates charged by these last resort loans.