What Are ‘No Credit Check’ Personal Loans?

Here’s the scoop on no-credit-check payday loans or title loans.

If you need money quickly to cover an unexpected bill or if you need to borrow money but have poor credit, you might consider installment loans or no credit check lenders to help you rebuild your credit. Before you sign on the dotted line, understand what the terms of the loans are, how they differ from soft credit check loans or hard credit check loans and what will happen if you choose to take on a no-credit-check personal loan.

What Are No-Credit-Check Loans?

If you have a FICO score of 620 or below, you might already know there are a variety of loan products that do not require a credit check. These loans often require payment within 15 to 30 days. The interest rates might be referred to as fees and can be as high as 400 percent. No credit check loans include payday loans, title loans and personal installment loans. Learn more about each type of no credit check loan to see if one is right for your financial situation.

Payday Loans With No Credit Check

Payday loans are loans in which you write a check for the amount of the loan with a fee included, and then the lender gives you the money for the loan. On your next payday or within a set time period, you must bring in the amount of the money back to the lender and you will receive your uncashed check back. If you fail to bring the money back in time, your check — along with the pricey fees — will be cashed. You’ll still pay a hefty amount in fees, so try to find a payday loan alternative before opting for one.

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Read This First: Why Payday Loans Are Dangerous

Title Loans

Title loans use a car title as collateral for the loan. You might be able to borrow a larger amount of money than with a payday loan, but the payment is still due within 15 to 30 days. If you fail to repay the money, you could lose ownership of your vehicle.

Online Loans With No Credit Check

Online installment loans require you to make monthly or weekly payments until the loan is paid off. Your payments might be interest-only with a balloon payment at the end for the remainder of the loan.

Advantages of No-Credit-Check Personal Loans

One of the biggest advantages of a no-credit-check loan is that the process can be completed very quickly — often within a few minutes or hours — because the company will not run a credit check on you. The only requirements are your identification and proof of income. People often turn to these types of loans when they’re in a financial bind and have run out of other options.

Disadvantages of Personal Loans With No Credit Check

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One of the disadvantages of these types of loans is the higher interest rate that you end up paying. The interest is often around 400 percent APR, which is much higher than what you would pay if you borrow the money on a credit card or took out a personal loan.

Additionally, people can become trapped in a cycle of relying on payday loans because they need to continue using them to cover the next month’s bills since the entire amount is due at the beginning of each pay period. No credit check online loans can require low monthly interest payments, with one large balloon payment at the end. If the borrower cannot pay it off then, they might borrow the money again and restart the cycle.

The example below demonstrates just how much more you might have to pay with a no-credit-check loan compared with other options. Imagine you are taking on a $3,500, two-year loan calculated with a standard amortization schedule. Loan option A and loan option B are both from lenders that consider credit; loan option C is from a no-credit-check lender.

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  Borrower’s credit  APR  Monthly payments Total payments 
A Excellent 6% $155.12 $3,722.93
B Poor 36% $206.67 $4,959.98
C No credit check required 400% $1,167.84 $28,028.12


Check Out: 7 Types of Loans for People With Poor Credit

Alternatives to No-Credit-Check Loans

One option is to apply for a personal installment loan with a credit check through your bank or online. Even if you have poor credit, personal installment loans offer better rates than payday loans. You can also borrow money from friends or family. Another option is to put the money on a credit card, which will cost you less in interest and allow you to make payments over time with less outrageous interest rates.

If you decide to look for online installment loan options, shop around for a low interest rate and look for one that requires a credit check. A credit check loan will come with a better interest rate than the ones that do not require a credit check and make it easier for you to pay back the loan and come out ahead financially.

Some businesses and many hospitals are willing to work out a payment plan with you so you can cover unexpected bills without taking out a payday loan. Before you take out the loan, first check to see if this option is available to you. Create a budget and determine how much you can afford to pay each month. Try setting aside money each month to help cover emergencies so that you do not end up in this situation again in the future.

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On Deck: 10 Common Personal Loans — and Options for When You Can’t Qualify 

About the Author

Miriam Caldwell

Miriam Caldwell is a North Carolina-based writer specializing in personal finances.  Miriam has written about everything from budgeting to managing your money while married. With more than 12 years of experience, her writing as appeared online at TheBalance.com, About.com, and BlissfullyDomestic.com.

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