Installment Loans No Credit Check: Important Things You Must Know
How Installment Loans No Credit Work
As the name suggests, these short-term loans do not require credit checks and are usually approved quickly. The installment loans with no credit check are paid off over the agreed period in pre-scheduled payments. Such loans may include personal loans, mortgages, just to mention but a few. Simply put, a direct lender won’t carry out formal credit checks with credit bureaus to give out these loans. But that does not mean that the lender won’t confirm the credit history of the borrower. In most cases, the lender checks the credit information of the borrowers with reputable companies like Teletrack including other credit bureaus.
Besides that, the borrower must meet eligibility requirements for the loans to be processed and approved. The loan amount offered hugely depends on the borrower’s income as well as the lender’s personal factors.
The application process for these short-term loans is very easy. The reason behind this is that there are no strict requirements like when applying for bank or credit card loans. In fact, borrowers having poor credit scores are still eligible.
Applying for Installment Loans No Credit Check: Top Considerations
Applying for loan offers with no credit check is a great move but some lenders have the tendency of requesting extremely high interest rates, including other hefty fees on their loans. In short, borrowers end paying more than they thought.
So, it’s always advisable to pick a lender who is reputable. The online reviews and testimonials are resourceful when searching for the best lender. In general, there are a number of things that you should keep in mind to make an informed decision.
Quick Approval Is Actually Bad
The reason why a loan for bad credit is highly preferred especially during emergencies is because the approval process is entirely lenient. It’s imperative to adhere to the loan terms. It is worth noting that if the borrower dares to violet the loan agreement, he or she might be slapped with penalties, late fees just to mention a few. You should be wary of lenders promising very quick approvals because some of them are questionable.
Unbelievably High Fees/Interest Rates
As mentioned, most lenders charge exorbitant fees and interest rates on their loans. The reason is that there is no state law that regulates or provides guidelines for the lenders. As a result, lenders are free to set fees or rates as they wish. What you need to do is compare the various options available and you’ll surely find an offer that matches your specific needs.
Very Forceful Debt Collection
Installment loans must be paid on time. If the debtor is not in a position to pay off the loan as agreed, he/she will be required to pay late fees.
And if he/she continuous to default the loan, the lender sends very aggressive debt collectors who would withdraw money from the debtor’s bank account automatically. That being said, you should borrow loans that you can comfortably repay on time.
Continual Borrowing Spree
Some lenders accept loan applications from borrowers who haven’t paid their outstanding loans but at a higher fees and interest rates. Basically, the borrower would be paying off two loans (with different fees and interest rates) simultaneously. Consequently, the borrower would remain in the similar condition or even worse. The main point here is that you should borrow loans after repaying the other loans.
Installment Loans No Credit Check Vs Payday Loans: Which Is Better?
The difference between installment loan and payday loan squarely lies on the repayment terms. For instance, to pay off the payday loans, debtor is required to pay interest and principle rates in unison. Additionally, the time frame of paying back payday loans ranges from 15 days to 30 days.
The major disparity between payday and installment loans is repayment schedule. Usually, the repayment schedule for installment loans can be longer. On the other hand, a payday lender expects the borrower to pay back the loan immediately he/she receives his/her monthly payment.
Installment Loans No Credit Check Alternatives
If you want quick, short-term financial assistance, there is a long list of options in addition to the installment loans no credit check. Some of the options available include the following:
Online Lenders
There are countless online lenders offering online installment loans to borrowers having poor credit scores. Most of these lenders issue loans based on the borrower’s monthly income, educational background and profession.
PALs (Payday Alternative Loans)
In most cases, PALs are offered by credit unions. These loans are cheaper compared to traditional payday loans.
Credit Unions
It is possible to get a personal loan from local credit unions albeit your credit’s bad. The small-dollar loans offered by these unions are affordable and have very flexible repayment terms. Moreover, these unions also offer starter credit cards for the borrowers to improve their credit scores. Most of the credit unions charge less than 18% interest rates.
In Summary
Usually, installment loan lenders rely on credit bureaus to check the borrowers’ credit information, for instance, they are able to know if the borrowers pay their bills promptly, which in a way improves borrowers’ credit scores.