When in a financial emergency, would you choose a loan that’s less likely to be approved? Here’s why No Credit Check loans thrive despite a higher cost.
There’s no doubt that No Credit Check loans are among the higher cost loans out there. What makes them still so prominent and widespread? Isn’t the cost of the loan what makes them unattractive to people? Clearly, the market is proving since years that that’s not the case. While loans that people use to fulfil wants and aspirations (like car loans and home loans) are to a huge extent affected in demand by their cost, the same does not seem to stand so true for loans that serve people in urgent needs of funds for various reasons.
When in such a situation, options can be limited for a lot of people. Quick loans and borrowing from friends/family seem to be the available solution but not many wish to choose the latter and especially not after having done it once or twice before. Hence, quick loans are increasingly being the most preferred choice and as you read ahead, you shall see that a lot of people do not tend to have a strong credit history, making No Credit Check the only available quick loan option that can to an extent be relied upon.
Why do so many Individuals have Poor Credit Scores?
Roughly half of the millennials in the US do not have a healthy credit score. People outside of that group are a little better off but not by a huge number. What leads to this? Let’s take a look at the top reasons:
Are No Credit Check Loans Faster?
Credit check is just like any step of the loan approval process – it takes time. When one step is skipped, time is saved. However, there are other things that need to compensate for what the credit check does. Being a short term loan, these are typically steps that do not take much time, hence No Credit Check loans still tend to be faster.
The other thing that makes these loans faster in general, is that they’re non-bank direct lender loans. Their processes seem to be simpler and quicker in general but this of course varies from lender to lender, and so does the speed and consistency of loans disbursement.
We have a few suggestions that can help you get loans quicker, if that’s what you need:
How Much Costlier are these Loans?
Loans and their mathematics are not designed to be very easy to understand. It’s hard to compare the usual bank and credit card loans with the non-bank direct lender loans which come with APR disclosures and simple interest while the former typically charge compounded interest.
In the simplest of terms, what I can say is that in less than a year’s term a significantly higher APR loan shall have a significantly higher cost irrespective of the type of interest being charged. Beware of loans that charge interest monthly – these shall have a many times higher APR (which is Annual).
Being very short term loans, No Credit Check loans have a high rate of interest but if your loan term is short enough, the final amount you end up paying quite a small amount at times. The only real way to know how costly a loan really is, is to find out the final cost.
One piece of advice here is to stay totally away from loans that you may fail to repay on time. Loans get very expensive if you cross the stipulated repayment schedules.
When should one avoid No Credit Check Loans?
No Credit Check loans are higher cost loans which are intended for emergencies and other sudden needs. These are also essentially short term loans which are not intended to be designed as a replacement for bank loans or other conventional loans like home loans, car loans, etc. They have their benefits but used wrongly, they can be very expensive and damaging too.
While it is virtually impossible to make an exhaustive list of every situation in which such loans should be avoided, here are a few which should help understand the idea well:
Is the “Guaranteed Approval” Real?
Many No Credit Check loans claim to offer a “Guaranteed Approval” on the loan. While this claim seems too good to be true, there’s more to it than meets the eye in the first glance.
I have read into the finer lines of many such loan offers and also spoken to some past borrowers and here I shall share what it truly means – which can vary a little from lender to lender but at a broader sense, remain fairly standard.
The first thing to keep in mind, is that lenders of the No Credit Check loans being non-bank entities, are able to offer a very flexible sum of amount. Some lenders can choose to offer loans for as little as $100. Maybe even lower but I didn’t find any such mention.
The second thing is that the marketing and terminology is worded in a way that it assumes qualification for the loan. If you do not qualify for their loan i.e., if you do not meet their eligibility criteria, there’s anyways no question of an approval. This also encompasses what amount you shall be eligible for borrowing.
Given these facts, it is fair to state that provided you apply for your loans of an amount that their eligibility criteria can accommodate and provided that you meet the rest of the eligibility requirements, your loans shall be approved with certainty. The catch here is that it’s hard to know for sure, what amount can be approved. Some lenders tend to make counter-offers to borrowers when they deem the borrower ineligible for the amount that’s being applied for.
Conclusion
Loans are available in so many ways and forms with so many labels today, that it gets confusing these days for the borrowers. No Credit Check loans also come under multiple labels and are typically offered by non-bank direct lenders. Being riskier for the lender, they tend to be a higher expense loan but the government regulations ensure transparency by mandating APRs to be disclosed and by eliminating compounded interest which tends to make lower interest rates far more expensive over time. The other advantage can be the very short term – which can be useful to many borrowers.
One of the reputed and experienced direct lenders offering such loans is CashAmericaToday. You can check out these pages to find their longer term online installment loans with no credit check and shorter term online cash advance with no credit chek.
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