When you apply for a loan from any organization such as banks, they tend to check your credit score or history before making any decision in the matter. If your credit history is bad and you have bad reviews in your account, the organizations may resist granting you the loan and you can lose the chance. There are loans such organizations provide which do not check your credit history and grant you the loan on different conditions. Such loans are known as ‘no credit check loans’ and can be applied by people who have a bad credit history or are not really sure about their credit score. The main difference in this case is the interest rate which is higher than the other loan types. The lender will not check your credit history but would only require a proof of your present income and grant you the loan.
There are many important features to know about ‘no credit check loans’ such as:
- Quick credit approval: For such loans, you will not have to give in a lot of time to get the approval. The organization granting you the credit will approve the loan application much quickly as compared to the normal applications.
- Higher interest rates: As mentioned above, the interest for such loans is usually higher as the risks are higher. This may come as a spoiler to the applicant but the other benefits that come along cannot be compromised.
- Flexible repayment time: Another important feature of no credit check loans is the flexibility provided by the organizations to pay back the token amount. Though they require a higher interest rate, they grant you enough time to repay as per your comfort. You can ask for enough time before making the deal and the lender would easily grant you the same.
- Available for higher amounts:When you require a very high amount of loan, applying for such credit loans comes as a better option as you can bag great deals from the lender. There are many loan granting organizations which avail such loans only for cases that involve very large amount of money.
Advantages of no credit check loans:
Apart from flexible repayment time, quick approval and availability for higher amounts, there are many advantages of this type of loan.
- When you apply for this loan, you don’t have to go through a lot of paperwork. The process is much simpler and gets completed faster. You also don’t have to provide a lot of documents from your side; income proof proves to be sufficient here.
- Unlike other loans, organizations in this case would not ask for collateral from you. You will not have to worry about any of your assets as the organizations cannot claim them as their property even if you are not able to repay the amount. No property of yours can be confiscated by the organization under any legal circumstances.
- Even if the interest rates are higher for these loans, they are fixed and cannot be changed by you or the lender. You can easily pay the loan under the given time with the fixed interest rate that will not be changed later.
- You can improve your credit score by applying to this loan.Your application for a no credit check loan can easily be approved as compared to the other loans you apply. This would naturally have a good effect on your credit score which could be negatively affected if your loan applications get rejected again and again.
Drawbacks of no credit check loans:
- Although, there are many advantages for the borrower, all theterms and conditions usually favor the lender as the loan involves collateral,credit check, etc.
- Again, the interest rates are much higher for such loans ascompared to the other loans you apply for.
- The tenure that is set for no credit check loans is flexible and no complications are involved for the borrower,the term that is decided is usually short which can make things difficult for the borrower.
No credit check loans are different from secured and non-secured loans and, therefore, are treated differently by the loan granting organizations. While applying for such loans, make sure to read every term and condition carefully and only then make a commitment with the lender.