No Credit Check Loans Come with Instalment benefits
Bad credit borrowers struggle to get a deal at affordable interest rates. Whereas traditional lenders and banks shut you out of using loan products, direct lenders charge high-interest rates on the loan amount. Much as FinTech has introduced a convenient approach for borrowing money, you cannot escape the impact of impaired credit standing. Having a hard credit check when you already have low credit score. Below 721 credit score, considered “Fair” by Experian, the top credit reference agency of the UK will be like driving a nail into the coffin.
What is No Credit Check Loans?
Loans with no credit check and no fees are all the rage because they are easily accessible without the need for a guarantor and collateral. Small No Credit Check Loans come with a very short repayment period, not more than a month, and hence they seem to be very much affordable. They trickle their fancy because they can get rid of them as soon as possible.
However, the devil is in the details. Surprisingly many borrowers have no clear idea of how each loan differs from the other. There are mainly hard credit and soft credit checks. A hard credit check leaves hard footprints on your credit report that remains for two years. Direct lenders run hard inquiries when you want to take out a long-term loan.
A soft credit check, on the contrary, does not leave hard footprints on your report and therefore you do not lose your credit score. A few reliable lenders run a soft credit check to analyse your repayment potential. As per genuine lending criteria, No Credit Check Loans do not exist, but some lenders lend money without running any credit check to charge very high interest rates.
Important Facts of No Credit Check Loans
A lender disburses you what you quote without looking over your income statement. Since there is no chance of rejection and default risk is very high, the lender gets an opportunity to entrap you in a debt spiral. You can get no credit check loans for 14 to 20 days and you will have to pay off the debt in a lump sum. The APR can be 521% or more. With such high interest rates, they can burn a big hole in your pocket.
It is important that you compare APR as it gives you an idea that how much you would pay for the whole year. You should do extensive research to choose a lender who provides a loan with a soft credit check. They are much more affordable and work out in favor of borrowers. Reputed lenders examine your repayment potential before disbursing money. You are likely to get lower than your need as their intention is to prevent you from borrowing more than your affordability.
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Installment Loans Vs No Credit Check Loans
No credit check loans do not come with installment features. If you want to pay down a loan over an extended period, you need to apply for installment loans. The repayment period varies from three to 12 months, depending on the lender’s policy and the size of the loan. As you have to pay down the debt every month, the interest will be lower than other small loans even if your credit history is bad. Installment loans for bad credit can help boost your credit score provided your lender informs credit reference agencies of your timely repayments.
The bottom line
No credit check loans can throw you in serious financial trouble. Make sure that you take out a loan with a lender who runs a soft credit check. Soft inquiries will not pull your credit score and not let you fall into a predatory cycle of debt.