Usually, lenders conduct checks on your account to see how well you’ve managed your debt and repayments in the past. This is essential for them in order to determine how qualified you are for the loan you’re borrowing. This will also help set your interest rates. On the other hand, some lenders are willing to let you borrow personal loans with no credit checks, basing your qualification mostly on your ability to pay it back.
While it’s not as common as other forms of credit, you can still find providers willing to provide easy personal loans with no credit checks in the form of:
Payday Loans - This is probably the most common type of no credit check loan available. Payday loans typically last until the next paycheck and come with higher interest rates.
Auto Title Lenders - You can also try lenders willing to trade you a big loan in exchange for your car’s title. These providers can be found online or you can try local storefronts near you.
Online Lenders - While they may not offer it in the form of payday loans or auto title loans, some lenders online may offer similar products for you.
Pawn Shops - As a last resort, you can try your local pawn shop. You can pawn off some of your valuables for some cash and you can pay this back over time in order to get the item back.
While they can be convenient for people having a hard time building up a credit score, relying too much on no credit check loans does have its potential drawbacks:
Expensive - No credit check loans can be quite expensive, especially if you don’t have a very good credit history in the first place. When you’re trying for payday loans, your terms are generally shorter, lasting only about two weeks.
Risk of Debt - There’s a risk of getting further in debt should you fail to manage your no credit check loans well. For example, it may be hard to pay off a payday loan on time so many providers give you the option of rolling it over into a new loan, which then snowballs into an even bigger hurdle next time.
They don’t build credit - Getting these types of loans don’t help you build credit which is unfortunate, as being able to build a good credit score can open more financial opportunities for you. This situation kind of forces you into relying even more on no credit check loans in the future, which limits options.
Be careful of scams - Just to clarify, this doesn’t mean that all no credit check loans are scams. However, it still pays to be careful of any scams that promises instant funding without conducting the necessary checks. Borrowers looking into no credit check loans can be a particularly enticing target for thieves, so remember to stay vigilant and only trust reputable lenders in NZ.
Of course, if you’re not comfortable with a no credit check loan, you can always seek out other alternatives for finance such as:
Secured Personal Loans - While this may seem similar to a car title loan, you can find other secured personal loan deals from reputable providers, as long as you have an asset you can use as a security guarantee.
Finding a co-signer - Like with bad credit loans, you can apply for a loan with a co-signer who has a better credit rating, and whom you trust, such as a friend or family member. Lenders will take into account your co-signer’s score as well, increasing your chances for approval.
Get help from a Credit Counselor - You can also try reaching out to credit counselors on how to manage and improve your credit score.
Improve your Credit Score - Of course, this is going to be a difficult process but it will be so worth it in the end. Building up your credit score allows you to save over a long period of time, potentially leaving you with more money in the bank while opening more doors for financial success.
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