What To Look Out For With No Credit Check Loans
No credit check loans sound like a dream come true for some borrowers - but not so fast - there are some risks you need to be made aware of. Fortunately, you can successfully avoid them and benefit from all the advantages payday loans with no credit checks offer you!
What Are The Risks?
You've probably heard a lot of rumours surrounding no credit check loans - that they are sketchy, that they will put you even deeper in debt, that you will end up paying through the nose in interest fees, that they can damage your credit score irreparably, etc. Some of the things you hear are true, while others are just plain misinformation. Let's talk about the risks and drawbacks, once and for all.
The interest rate is high
Let's start by addressing the elephant in the room, shall we? Yes, a loan with no credit check absolutely comes with a very high interest rate. You can expect APR rates that sit around 700% or even 1500%, depending entirely on the lender, your financial situation, how much you borrow, and for how long. What you need to remember is that the longer it takes to pay off the money, the more it will cost you, which can create issues of affordability.
The loan amounts are small
The other thing is that the loan amounts are not all that high, which can become an issue if you need more money. That could lead to a situation where you take out multiple loans in order to cover the full sum you need, and that can make repayment a very difficult game to keep track of. It can be more responsible to simply look for a loan that will accommodate your needs regarding the amount.
The lenders can be unreliable
When it comes to the actual lenders, unfortunately, you can encounter problems. You see, not everyone is registered and trustworthy, and there are quite a few loan sharks out there masquerading as earnest payday lenders. The number of people who've fallen prey to these predatory establishments is not small, and if you're not careful, you may end up in their greedy hands, having signed a very unfortunate contract.
How Can You Avoid The Risks?
Ok, now that we are all informed and aware of the risks involved with no credit check loans, we can go ahead and talk about how you can avoid the risks that come up.
1. Make sure to thoroughly check the lender
First thing's first - before signing anything, you need to investigate the lending company. Look into their background, look for reviews from third-party websites online, and check with the Financial Conduct Authority (FCA) that they are properly registered and authorised to lend money. You would not believe how many scam companies there are and how easily customers can be duped into signing dubious documents that tie them into phony contracts. Hidden charges could be the least of your problems.
2. Ensure affordability before you borrow money
A good lending company will always carry out an affordability check before accepting you officially or allowing you to sign anything committing you to a loan. But it is also your responsibility as a borrower to make sure that you can afford to take this money and then pay it back, including the full interest amount.
- If you think you will struggle at all, then you cannot afford it.
- If you need to borrow money from somewhere else to pay off instalments, you can't afford it.
- If you have no idea whether you can afford it or not, you can't afford it.
3. Check that you get enough money
There is no use in getting a loan if the amount will not even meet your needs, so before you sign on the dotted line, you need to double check and triple check what amount you actually need (always overestimate) and then what amount you will be able to receive (always underestimate). If the amount you can get comfortably covers your needs, then you're good to go, but if there is any chance that you might need to borrow extra from another source, then it's not worth it.
Are There Better Ways To Get Money?
Let's say payday loans with no credit checks have not convinced you - what are the alternatives to no credit check loans, or even better options to get money when you have bad credit, or are simply looking to avoid a credit check?
- Secured loans - if you own an asset of decent value, such as a car, a house, or another property, why don't you maximise its potential? You can release money from such an asset and your credit score will count less, because the loan is secured with collateral.
- Borrowing from friends and family - family won't ask for a credit check - at least not most. You may only need a good character reference. It may also be a good idea to make a written document stating the terms of the loan, so that both parts are secure and satisfied and you avoid future disputes.
- Saving up - this is hardly a quick solution like instant loans with no credit checks, but it doesn't require a credit check or going into debt. Saving up and buying something in cash leaves no room for questions or doubts.
As you can see, there definitely are things you need to look out for and consider with no credit check loans, but the risks can be avoided if you're well prepared and financially responsible. Inform yourself about the top tips on getting a loan with no credit check so you can rest easy and enjoy your money.