No credit check personal loans provide much needed financial assistance for borrowers who have suffered credit problems in the past. While bank loans traditionally require applicants to submit to a credit check before receiving money, cobra payday loans are gaining in popularity and, contrary to popular belief, some brick and mortar banks will award personal loans without a credit check. Although these loans have their advantages, they also carry risks that financially-savvy borrowers should consider before filling out a loan application.
Online Personal Loans Without a Credit Check
Online lenders abound with claims that they will approve your personal loan application with no credit check in mere minutes. Keep in mind, however, that if the claim sounds too good to be true, there’s usually a catch.
Online personal loans without a credit check aren’t the same as bank loans. Online loans fall under the same category as payday loans. Like payday loans, internet personal loans often carry high fees and even higher interest rates. If you aren’t able to pay off the online loan by payday, you have the option to renew the balance – but after each subsequent renewal the fees you owe will escalate until your internet loan becomes too expensive to manage.
Even worse, some online personal loan companies aren’t real companies at all – they’re scammers. They’ll use the bank account information you provide to clean out your account and leave you in an even deeper financial hole. Therefore, choose your online lender carefully. Finding a loan without a credit check isn’t worth the risk some fly-by-night online lending companies present.
Ask the Bank Manager for a Personal Loan
Believe it or not, bank policies aren’t written in stone. The bank manager has the ability to bend the rules for certain customers. If you have a good history with your bank, have managed your money well and haven’t incurred large overdraft fees, make an appointment to speak with the bank manager.
Prepare for your meeting with the bank manager by compiling documentation of your income, debts and assets. You want to prove to the manager that you are financially capable of repaying the personal loan you are requesting.
Explain your credit problems to the best of your ability. Not all credit problems are the result of irresponsible financial behavior. Unforeseen circumstances can also leave you with bad credit through no fault of your own. Situations that can result in credit damage include:
- Job loss
- Medical emergencies
- Identity theft
Rather than asking the bank manager to make an exception in your case, inquire what you can do to get your personal loan application approved without submitting to an embarrassing credit check. If you make a convincing enough argument, the bank manager may very well put your personal loan through himself.
Get a Co-signer for Faster Loan Approval
Your credit may be bad, but it’s a fair bet that a friend or family member close to you enjoys a good credit rating and would have no qualms about the bank performing a credit check. Provided that person is willing to vouch for your ability and willingness to repay what you borrow, they can serve as a co-signer on your bank loan application.
Co-signers provide lenders with additional security. The co-signer’s good credit rating all but assures the bank that the individual takes responsibility for his debts. Thus, the bank knows that should you fail to repay your personal loan, your co-signer will likely repay what you owe in order to preserve his good credit rating.
Before asking a loved one to co-sign your loan, make sure that you do, in fact, have the means to repay what you borrow. As soon as your friend or family member signs your loan paperwork, he becomes legally liable for your loan and the bank can sue either of you for the full amount if you default on the payments. In addition, the account will appear on the co-signer’s credit report. Making just one late payment, therefore, will damage your loved one’s good credit rating.
Offer Collateral and Avoid a Credit Check On Your Personal Bank Loan
If you’re trying to obtain an unsecured bank loan with no credit check, you’re likely to end up disappointed. Banks are in the business of making money and most won’t be willing to simply hand you a large sum with nothing but your word to repay the loan with interest. Offering collateral, however, may just tip the scales in your favor.
Collateral is any item the bank can take possession of if you default on your personal bank loan payments. Your car, your home, your investments or your savings accounts can all serve as collateral to help you obtain a loan without a credit check.
Once the bank places a lien on your asset in return for payment of the amount you borrow, the loan becomes a secured, rather than unsecured, debt. Secured loans are much safer for banks – and much easier to obtain for those wishing to avoid a credit check than unsecured loans.
Don’t Avoid a Credit Check – Fix Your Credit!
While you may need a personal loan immediately, actively working to improve your credit is an investment in your financial future that you cannot afford to pass up. Making small changes, such as carrying a lower balance on your credit cards, can boost your credit rating. If you practice responsible spending, budget properly and carefully monitor your credit report for errors, the next time you need a personal loan, you won’t have to say no to a credit check.