Getting An Installment Loan With No Credit Check
There are some things that are hard to pay for all at once. If you need a new engine for your car, have an expensive medical procedure or even need to move in a hurry, you don't have the luxury of waiting around to save your money. That's why it's so important to consider getting an online installment loan when you need money now. As you search for installment loans, you may notice that most have strict credit requirements. There are a few, though, that might not require a credit check at all. Understanding how these loans work and how your credit might impact the loan is a good way to understand why you might consider getting a no-credit-check loan.
What are Installment Loans
Installment loans are among the most common types of loans given. If you have ever taken out student loans, bought a house, or even purchased a car, you have probably already taken out an installment loan. These loans are always for a fixed amount, and the borrower pays back the loan plus interest over time. In some cases, installment loans have fixed interest so the payments will always be the same. In other cases, the interest rate is variable so the payments change as the interest rate goes up or down.
These loans are some of the most important in the modern economy. Installment loans allow people to make the big purchases that would otherwise be impossible. Even extremely wealthy people may not have hundreds of thousands of dollars of liquid assets just lying around, waiting for them to buy a home. When you take out an installment loan, you're simply acknowledging that you can better put your money to work if you're willing to spread those payments out over time.
Smaller installment loans work on the same principle. People take out the loans when they could afford to save up over time for something, but they need to make the payments now. In most cases, one simply has to prove that he or she has the ability to make the payments back to the lender during a certain period of time to get the loan.
Why Credit Checks Matter
Credit checks are usually an important part of the loan process. After all, they're one of the few things at which a lender can look to figure out whether a customer will actually pay back what they borrow. While a credit check can't tell a lender anything about your future actions, it can tell a lender a great deal about how you have dealt with credit in the past.
In most cases, these checks are first used to determine whether to loan money to a person and then used to determine the interest rate. If a company chooses not to do a credit check, it is because that company uses other factors to determine the same end results. When a company forgoes any type of interest check, it is usually both because it is more focused on your current ability to pay and that it has mechanisms in place to recoup its investments should a borrower be unable to make the payments to which he or she agreed.
Getting a Loan Without a Credit Check
Getting a loan without a credit check is difficult, but it can be done. It can be uncommon to find an online loan that doesn't want to run at least a soft credit check, but those that do tend to work on a few basic assumptions.
The first assumption is that you have the means to pay back a loan. These loans do have an approval process, and the bulk of that process requires checking to make sure that the borrower has a steady income stream. If you have the money to make the payments, most lenders will work with you.
At the same time, lenders also assume that they're taking a bigger risk than some of their peers. As such, they charge a higher interest rate to try to recoup more money up front. This means higher payments for you, and overall it means spending more money when you borrow.
Finally, these lenders tend to assume that borrowers need money quickly. This makes the turn-around time fairly short and allows you to walk away with money in your account within a few days. When you take out an installment loan, the time period between your installment loan estimate and actually getting the money is usually less than a day.
How to Know if a No-Credit Check Loan is Right for You
Getting an installment loan online without a credit check can be the right move for you, if you fall into one of a handful of categories. The primary group that can and should make use of these loans has the means and ability to pay back loans, but might have a bad credit score that makes taking out a traditional loan much more difficult. If you know that you have the money to pay back the loan, getting an online installment loan can help to get you out of tight financial situations.
Ideal candidates should understand the following:
- These loans should be paid back on time
- The interest rates are higher than those with credit checks
- The fees for missing a payment can be very high
- You may or may not be asked to put down collateral for the loan
If you are comfortable with all of those factors and think you can make a payment, choosing one of these loans may help you financially. As long as you make the commitment in good faith, these loans can be very beneficial.
If possible, it's usually more financially sound to go with an installment loan online that requires a credit check. If you have poor credit but can make the payments, though, a no-check loan can help to get you back on your feet. As long as you realize that you have to make the payments on time, getting one of these loans can be quite helpful.