No credit-check loans are a product which many people consider to help ease the burden of financial difficulties. However, these products are not without risk, as with all financial products there are pros and cons to a no credit-check loans:
Pros
No credit check loans are available to everyone, as there’s no credit check it doesn’t matter if you have a bad credit history, they are available to all. The fact that there’s no credit-check also reduces the amount of paperwork that needs to be completed in order to get a loan making it a quick and hassle-free way to get your hands on a little extra cash.
They are easily and quickly available which means you can quickly get yourself out of any short term financial difficulties you may be facing. For example they may be a good way to bridge the gap between the last week of the month and payday.
Money from a no credit check loans has no restriction on usage, if you borrow money from a bank they will ask what purpose the money is being borrowed and you will not be able to use the money for anything else. Unlike a normal bank loan, this money can be spent on anything you require.
It would be easy to think that no credit check loans are a good solution to all your financial woes, however these products do come with a large amount of cons.
Cons
Interest rates on no credit check loans are typically very high. The company issuing them will charge high interest rates to everybody, as there is no credit check they will assume everyone taking out the product is a high risk. As a result of the high interest rates these loans should be seen as a short term solution only. If you take out these products and miss payments the penalties will be very high and you may find yourself owing a lot more than your original loan amount.
As these loans are given without checking the credit history of the applicant they are likely to be for low amounts of money, generally only a few thousand dollars. Some no credit check loans are secured against things such as your car or your house, if you take out one of these loans you must make sure you make your repayments or your vehicle or house will be at risk.
As with all loans you run the risk of accruing more debt if you are unable to make your repayments. No credit check loans are more risky as the company you borrow them off are less likely to be as lenient as a bank if you find yourself on hard-times. Some bank loans have payment protection insurance which means should you lose your job the insurance will repay the loan until you find a new job, no credit check loans have no safety net, if you miss a repayment your interest is likely to be high and the amount you owe will increase drastically.
Overall no credit check loans an be risky, you should only get a loan if you know you can afford to pay it back, if you need a short term loan for a few days until payday then this product is the answer. If you are in huge financial difficulties and are unable to get a regular loan then you should avoid this kind of product as it is likely you will find yourself in even more difficulty. Credit checks are in place to protect the customer as well as the lender, if you can’t borrow more money there’s probably a good reason and it may be more beneficial for you to speak to a financial adviser or Citizen’s Advice than to get a no credit check loans.