What do you do when you face cash crisis and monetary help from family and friends does not seem feasible?
Instead of allowing the situation to worsen and delaying obligations, one should look for some outside assistance in the form of a loan. But what if you have bad credit?
Opting for a loan always comes packaged with the pain of producing asset documents, credit checks, endless bank visits etc. If you want to cut down on these hassles, there is an evolving and much better option of availing loans from online lenders and help you get unsecured loans with no credit checks. The applicant can get the funds even without offering a valuable asset as security for the loan amount.
Credit Check vs. No Credit Check
Unlike a mortgage loan wherein the borrower mortgages a valuable such as land or gold, an unsecured loan is offered without collateral. And since the loan is offered without any tangible guarantee the owner’s credit reputation or credit rating usually plays a vital role in deciding the applicant’s eligibility for the loan.
While other loans are backed by the borrower’s property or valuable, unsecured loans offer greater risk for the lenders and hence charge a higher rate of interest. But it is still wiser to seek an unsecured loan than to voraciously spend through a credit card, even if banks offer a credit card with high overdrawing facilities.
Unsecured loans are good options for people who need instant and quick loans without having to go through endless formalities of filling forms all day. It should only be used for a short period of time to satisfy the sudden spurt for cash because it has a high interest rate.
The interest rate may be fixed and fall due annually or might exist with a variable interest rate contingent upon the duration of repayment. This should be verified by a careful study of the agreement or by study of the terms and conditions of the loan from the lender’s website.
Unsecured loans sans credit check provide a hidden advantage – they not only help one to get loans while having a bad credit profile, they automatically improve that same credit profile when he/she repays the loan as per payment term. Which helps in future borrowings.
Where and How to Apply for Unsecured Loans without Credit Check
The principle behind no credit check loan is that if an applicant can provide a convincing case then the company will be happy to approve the application. The initial information the lender requires is ID details and citizenship. A permanent address is important and ideally the applicant can provide proof of security of tenure as well.
Details of employment is what can make the stronger case for no credit check loans. The employment should be permanent of course and preferably full time, because this is the main piece of evidence to show that the applicant can make the monthly repayments.
Financial institutions have added many facilities for limited amount unsecured loans, like
- Can be done from any place with internet connection.
- Easy application, only involves filling in a short form.
- Quick processing, usually within hours of application.
There are ample online lenders like Wonga, LendingStream, Zebit, QuickQuid, Payday etc who offer short terms loans to under-banked customers. Most of their unsecured loans are approved on credit rating, which is validated on earnings, past payment history, bank transactions etc. by their respective underwriting engines with the help of data bureaus.
However, applicants with bad credit need not get disconcerted as they also stand a chance of getting loans by proving proper proof and/or additional documents. These generally include documents like last three months bank statements, National identity card, PhotoID proofs etc. A few manual checks are also conducted by customer care representatives to validate against fraud or potential bad-debt customers.
Regardless of the loan, always be cautious about comparing interest rates as they differ for week, biweekly and monthly customers, cashback potential, total charge of credit, defaulter charges and any hidden clauses before settling down for a loan provider.