Those with bad credit or a poor credit history often seek a no credit check loan. This is because the traditional channels of loan application are virtually certain to result in rejection. No credit check loans rarely constitute a long term debt solution, they merely serve as a short term measure to deal with a financial shortfall.
Advantages of No Credit Check Loans
- Short term financial solution. A No credit check loan can be used to bridge the gap between the middle of the month and pay day. This can help considerably if the rent is due, food is needed or money is needed in order to be able to get to work;
- Speed of availability. A no credit check loan can usually be approved and payment received on the same day, subject to the provision of qualifying paperwork;
- No credit check. It is possible for those with: bad credit, adverse credit, a CCJ, a loan default and bankruptcy to get a no credit check loan.
- No restrictions on usage. Loans for people with bad credit usually have restrictions on how they can be used. However, no credit check loans can be used for any purpose, including a holiday.
Disadvantages of No Credit Check Loans
- Usury interest rates. Lenders realise that offering loans for people with bad credit is vastly more likely to result in loan default. Those with adverse credit find that doorstep lenders charge 50-60% on unsecured loans. Those seeking Payday loans are charged APR of upwards of 1000%;
- Missed payments. The high APR on no credit check loans mean that any missed payments result in rapidly escalating levels of debt. It can be virtually impossible for those struggling with financial difficulties to ever catch up with repayments;
- Provides only a short term financial solution. The usury rate of APR means that a no credit check loan is only realistically constitutes a short term source of borrowing;
- Further financial difficulties. Those living from pay cheque to pay cheque may find that a no credit check loan only serves to leave that person even more short of money the month after.
No credit check loans, such as Payday loans, should only be considered as a stop-gap measure to get someone until the end of the month. The usury rate of APR can quickly make monthly repayments unaffordable. Always check with friends and family to see if they can lend money before signing up to a no credit check loan.