No Credit Check Loans: Some Factors to Take Careful Note Of
The popularity of no credit check loans is not difficult to understand - not having to answer for poor credit scores lifts confidence greatly. But there are limitations to what these loans have to offer.
Of course, securing fast approvals does not mean that free money is available, and there are definite criteria to be met before any lender will agree to parting with funds. It is only logical that the availability of personal loans of any type be dependent on strict rules.
Why Not Check on Credit Histories
It is understandable that borrowers welcome no credit check loans, but it can be confusing why lenders would so readily leave themselves more vulnerable to borrowers. However, there are good reasons.
First of all, the idea of securing fast approvals is highly attractive to prospective applicants, and this effectively gives the lender a competitive edge over those firms that still insist on checking credit histories. There is no shortage of options for borrowers, especially with the growth of online lending institutions, so it is easy for them to go elsewhere.
The result is that, despite the apparent great risk, there is more business done and more profits to be made. Also, lenders will compensate themselves for leaving themselves exposed by raising the interest rate on such personal loans a little.
Basic Criteria Must Be Met
The great attraction with no credit check loans there is an understanding that approval is all but guaranteed. That is why such loans are also sometimes referred to as guaranteed loans. This is obviously good news for applicants who find themselves in tight financial positions with less than impressive credit scores to boast.
However, securing fast approvals on loan applications does not mean that there is no criteria to satisfy. The basic qualifying factors need to be proven before any loan can be approved. The good news is that such criteria is very easy to provide, and are far from being complex.
There are four key criteria to meet. The applicant must prove that he or she is over the age of 18, and that they are receiving a regular paycheck from a reliable source of employment. For all kinds of personal loans the applicant must be either a US citizen or a permanent resident of the country, while the applicant must also have a bank account.
Mainly Small Loans
Normally, no credit check loans are only small in size, usually no more than $1,500. The reason is that lenders want to reduce the possible losses that might be suffered. It makes little sense, after all, to grant a loan of $30,000 when the credit history of the borrower is not known.
There are other aspects to these loans that should be noted too. Firstly, that the term of the loan is also very short, with as few as 30 days the typical lifespan of the loan, and secondly that the interest rate charged is very high, sometimes 30%. This makes such loans quite expensive and ensure that they come with high pressure repayment schedules, so securing fast approvals comes at a definite price.
Finally, repayments for such personal loans are taken out of the paycheck of the borrower directly, and usually in one sum. This means the paycheck of the borrower needs to be enough to cover the total cost of the debt (including interest) and cover the normal monthly expenses too. Repayments may be stretched over 2 or 3 months, but this is generally a special arrangement.
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ABOUT THE AUTHOR
Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on Bad Credit Loans Guaranteed Approval. She publishes informative articles about Guaranteed Bad Credit Loans, home loans, credit cards, auto loans, business loans and others at http://www.fastguaranteedloans.com