Personal loan balances at the end of 2018 amounted to $138 billion. Meaning, in a span of one year, there were $5 billion more of these loans issued!
And according to experts, this increase is due to the boom in the FinTech industry. Many of these online lenders, after all, issue personal loans with no credit check.
That’s right. Many of today’s personal loans no longer require damaging hard credit checks. That makes them appealing to the 12% of US consumers with a FICO score of lower than 550.
The question is, what exactly are these no credit check loans? What are your options and can you really qualify for these loans even with your poor credit score?
We’ll answer all these questions in this post, so be sure to keep reading!
Do Personal Loans With No Credit Check Really Exist?
Yes, these quick cash loans for bad credit borrowers do exist. Some of the most common are online personal loans and secured loans.
Let’s take a closer look at these loans that don’t require credit checks.
Online Personal Loans
Online personal loans — loans extended by FinTech companies — now account for 38% of all unsecured loans in the US. This boom in their popularity is due to their much more relaxed lending requirements.
FinTech lenders are more willing to extend their loans to people with bad credit. In fact, many of their loans are specifically marketed to subprime borrowers.
This is why many online personal loans don’t require hard credit checks. You still need to prove your ability to repay the loan, such as through a certificate of employment. Compared to bank loans though, it’s easier to qualify for a bad credit installment loan.
Also, online personal loans, unlike payday loans with 30-day terms, carry longer terms. Many of these are bad credit loans you can pay back within a three-month period or even longer. They do have higher interest rates than bank loans, but their rates are lower than payday loans.
Secured Personal Loans
Secured loans are financial services that require collateral. “Collateral” is any valuable asset or property that guarantees repayment of the loan. It could be real property, a car title, a debit card, or even a piece of equipment.
If a borrower fails to repay the loan, the lender will liquidate the pledged asset. By doing so, they can recoup the money they loaned. Since the collateral guarantees repayment, lenders have much lower risks to worry about.
This is why most secured loan lenders offer short and long-term loans for bad credit borrowers. Many of them also skip hard credit checks, since they already have a way to get their money back.
Loans With Co-Signers
Many lenders also offer loans for people with bad credit, provided they have a cosigner.
A cosigner acts as a guarantor for the primary borrower, backing up their promise to pay. If they do fail to pay back the loan, the cosigner will take full responsibility for the repayment.
A cosigner lowers the risks of non-repayment, so lenders are more willing to extend loans. Many of these lenders also no longer perform hard credit checks. This is especially true if the cosigner has an above-average credit score.
Get the Help You Need When You Need It the Most
There you have it: the truth behind personal loans with no credit check and what your options are. Now that you know more about them, you can decide if they’re a good fit for your current situation. Just remember that these loans have higher interest rates, so take as much time as you need to compare them!
Ready for more tips that can help get your finances back in order? Then check out our other blog posts!
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