If the time ever comes when you need money in a hurry and have tried all other options, then your best bet may be getting a payday loan. Although payday loans come with risks, they can be useful if the amount that you need is small and you can afford to pay it back quickly. One of the few benefits of a payday loan is a lack of credit check, so if you have bad credit, then a payday loan may be the only option available.
What Are The Qualifications For A Payday Loan With No Credit Check
For most financial lenders, the idea of offering a same-day loan without a credit check is unfathomable. The risks are just too high for them, and they won’t even entertain the idea of such a loan.
However, there are plenty of places that will offer such a loan. There are many places online to find quality payday loans but most of them will require a soft credit pull in order to determine the eligibility of the borrower. In order to truly bypass a credit check, the best option will be a local payday loan lender in your town. Most payday loans will have very few requirements and qualifications for someone to meet eligibility. While they may vary specifically from lender to lender and state to state, for the most part, the only requirements will be:
- Be at least 18 years of age
- Provide identification via driver’s license, social security number, etc.
- Have an active checking account
- Proof of steady income or employment
How Does A Payday Loan Work?
If you have met the requirements for a payday loan then it’s a matter of setting the amount needed and date of repayment. Most payday lenders will hand over the cash the same day as the application is filed, but online lenders may require a day to deposit the funds.
A payday loan will typically have a term lasting two weeks or until the borrower’s next payday, and the money will be repaid as one lump sum payment. The interest rate and fees will be added to the total amount and repaid by the date selected. Once this happens then, the loan is satisfied, and the account is closed.
What Is The Cost Of A No Credit Check Payday Loan?
While payday loans are a fairly simple process and definitely a quick way to get money in a pinch, they can be quite expensive. Bypassing a credit check can be beneficial and save a bunch of time, but the cost can really be steep. When compared to other loan types, such as personal loans, home equity, or credit cards, the interest rate for a payday loan can be astronomical.
The best way to compare these loans is by measuring their average annual percentage rates. An annual percentage rate is the total yearly cost of a loan, when taking into account the interest rate of the loan and fees charged by the lender. These are the averages for the most common loan types:
- Home equity loan: Ranging from 2.99% to 13.99%, with an average of 5.82%
- Personal loan: Ranging from 3.99% to 35.99%, with an average of 11.82%
- Credit card: Ranging from 9.99% to 35.99%, with an average of 14.65%
- Payday loan: Ranging from 391% to 521%, with an average of 400%
Payday loans are a little tricky to get exact data on as they are not legal in all 50 states. In fact, payday lending is only legal in 27 states, with nine more allowing for some form of short-term lending but with restrictions and the remaining 14 states, along with the District of Columbia and Puerto Rico, have forbidden the practice.
Why You Could Be Denied A Payday Loan
For the most part, a payday lender will be very willing to offer out loans. The majority of financial lenders will take the time to view a borrower’s income in order to see if they can afford to repay the loan, but payday lenders are much less detail-oriented. Still, they have a few reasons to deny someone a loan, such as:
- Unemployment: Probably the most important qualification for a payday loan is that the borrower will have a payday in the near future. A payday lender will be pretty adamant about the borrower having a job, and without one, they are almost certainly going to deny the application.
- Multiple Previous Loans: Despite not requiring a credit check, a payday lender will still have access to an application’s financial history. If they have a long history of payday loans, they have an existing payday loan or are taking a loan to pay another loan then the lender may deny them.
- No Proof Of Steady Income: This is true for people that work under the table or have no proof of employment. While they may be working and making money without hard evidence of a job such as a pay stub or W-2, a lender may deny the applicant.
Other Loans With No Credit Check
Payday loans may be the fastest and most convenient for a no-credit-check loan, but they are far from the best. The amount of money that will be paid in order to bypass the credit check makes them a highly undesirable option, and you’ll want understand how they compare to installment loans or revolving lines of credit. However, if you have bad credit and won’t be able to get loan offers from other places, there are still a few places to try first:
- Payday alternative loans: There are some credit unions that will offer payday alternative loans that range from $200 to $2,000 without a credit check involved. The fees for these loans are typically capped at about $20 and the interest rates will also be capped at around 28%.
The repayment terms can range from one month to an entire year. Some restrictions may apply as some credit unions will only offer this loan to members of at least one month, but some will offer them once the membership is established.
The focus of the loan is less on credit score and more on the borrower’s income and ability to repay the loan. Additionally, credit unions will report repayments to credit bureaus and so this option will help to improve your credit score as opposed to payday lenders that only report in the event of failing to repay. - Title loan: This loan type can be just if risky as a payday loan so be careful if considering this option. A title loan will use a vehicle as collateral for a loan and so credit is largely unnecessary.
The reason why is if the loan is not repaid then the vehicle can be forfeited and repossessed. When compared to payday loans, the upside is that the term length is usually much longer than the standard 14 days, and the interest rate is lower. The average APR of a title loan is still an incredible 300%, but the difference can end up being worth the risk. - Pawnshop loan: Taking an item to a pawn shop can be a quick way to get some money. This loan will result in the item remaining at the pawnshop until repayment, where it will be returned. Should the loan not be repaid in time, the item will exchange owners and belong to the pawnshop, who will most likely attempt to sell it.
This option comes with negotiating as the value of the item will be debated, and the total money offered for it will be a percentage of said value. The average APR for a pawnshop is much more manageable, although not great, 120%, and the length will vary depending on the pawnshop.
The Takeaway
There are few requirements in order in order to qualify for a no credit check payday loan. For the most part, all it will take is identification, proof of employment, and a bank account. The ease of getting the loan should not be the concern; it should be the price of repayment instead.
Payday loans can be extremely predatory and should only be considered as a last resort. There are plenty of other loan options available and better ways to manage money in general. However, if the desperation is great enough and you need the money in a hurry, then only take a payday loan in the event that you can easily pay it back in time. Failure to repay can have devastating financial effects and could end up getting you in quite a bit of trouble.