Friday 28 June 2019

The Pros and Cons of Quick Loans with No Credit Check


No-credit check loans can help you get money as quickly as possible, but they come with certain drawbacks. Make sure that you know them before borrowing money. No credit check means no inquiries – neither hard nor soft – will be made before signing off on. When you need money quickly for an unexpected expense, no loan can be better than quick loans with no credit check. These loans are faster than other small loans because a lender will save time in checking your credit report.

Here are the pros and cons of these loans:

Pros

You do not need a good credit score

If your credit rating is fair or good, you do not need to apply for these loans. No-credit check loans mainly aim at borrowers with poor credit history. You are likely to face cash shortfalls during an emergency. For instance, you may need money for your car repair or you may need money for medical treatment. Traditional lenders do not entertain people with impaired credit standing. Direct lenders, on the other hand, fill this gap in the financial service sector and allow people to borrow money despite bad credit rating.

Fast disbursal

The significant reason for providing these loans is helping those borrowers who have been struggling to borrow money just because their credit rating is disappointing. Online lenders believe that not all bad credit borrowers commit defaults because of financial irresponsibility. You just have to put in the loan application, the lender will perform an initial-stage shortlisting procedure and then examine your income statement to decide on the disbursal limit. You will get money within a couple of hours.  

Cons

They can be expensive

One of the biggest drawbacks of loans with no credit check is you will pay high interest rates because the default risk is very high. You will not get the best deal as they are exclusively available for borrowers with a good credit history.
Each lender follows different policy, so there is no fixed interest rate. Further, the rate of interest depends on the size of loan you take out. It is normally recommended that you should do enough research before jumping at any offer. By comparing deals, you will be able to choose the one with better interest rates.
The another reason for these loans to be exorbitant is they do not require any guarantor and collateral. Compared to guarantor loans, the interest rates of these loans will be higher. This is because the lender can call upon the guarantor to pay off all dues if you commit any default.

They will not build your credit score

The higher the credit score, the lower the interest rate will be. If you want to get the best deal down the road, your credit score must be fair. To build your credit, you need to show that you fulfil your financial obligations on time.
Since no-credit-check loans are small loans and require you to pay back the whole of the debt in a lump sum. The repayment period of these loans is not more than a month. Even if you settle all of your dues on time, it does not prove that you fulfil your financial commitments.
Instalment loans and long-term loans can help you improve your credit score as you are to pay back the money over an extended period. You should prefer taking out small instalment loans. The repayment period may vary from three months to 12 months depending on the size of your loan. If you continue to repay the entire money on time, your credit score will go up provided the lender informs credit reference agencies of your payments.

Take message home

Every loan offer has its pros and cons, but you will choose the one that best suits your needs. No-credit check loans can be riskier if you do not analyse your repayment capacity. You should apply to a lender who approved bad credit loans after making soft inquiries. These inquiries help a lender know about your repayment potential like hard inquiries but do not leave hard footprints on your report and therefore do not pull your credit score. Such loans charge lower interest rates than no credit check loans. You are recommended that you should do extensive research before grabbing any offer.