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:
Poor understanding of the credit system: Not knowing how to prioritize payments and not knowing when shutting down a credit account (eg. Credit card) can actually be harmful for the credit scores, is an easy way to lose out on your credit score.
Using one credit card for everything: If you have and use just a single credit card for everything, use it to a high percentage of its limit and don’t repay it fully each month, there’s a significant hit that you’re causing to your credit score.
Not checking and acting upon errors: The credit system is complex. Once a year, you can check your credit report free of cost and repercussions. It is important to do so and apply to correct any issues and errors you find. Errors are common and corrections are also often done when requests are legitimate.
Not knowing what all gets featured on a credit report: Many do not know that even applying for a loan that gets rejected, hits the credit score. That’s just an example of many other things that make up the credit score.
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:
Keep all the documents and details ready while applying
Provide complete information and try to ensure it’s all easy to verify
Provide good quality scans of documents when applying online
Ready reviews about your lender to understand if they’re fast at processing loans
Apply for only as much as you know you can really repay and it’s likely that the lender would make similar assessments and process you loan so you don’t have to reapply elsewhere and waste time that way.
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).