Over the past few years poor economic conditions around the world has left its impact on Australia making it more difficult for many Australian’s to meet their monthly financial obligations due to a lowering or total loss of income. Many of these people were forced to either use credit cards far more frequently, pay some [...]
No Credit Check Loans
For some consumers, getting needed funds through traditional loan channels simply is not an option. Delinquent accounts, late payments, bankruptcies and defaulted loans can ruin your credit rating and make obtaining a traditional loan when money is tight impossible. Untraditional personal loans with no credit check are available, but borrowers must know what they’re getting into when trying to get a no credit check loan, because they are indeed a last resort and borrowers who seek out this type of loan can find themselves in a worse financial situation than they did at the start.
Payday loans
In most cases, a no credit check loan takes the form of what is called a “payday loan.” Available both online and in typical bricks and mortar storefront locations, a payday loan is a short term loan for borrowers who need what essentially amounts to an “advance” on their next pay check. The amount borrowed in this type of loan usually range from the low hundreds to $1500. The term of a payday loan is only two weeks, so it is meant to get the borrower through until the next payday. The interest rate on a payday loan is almost always incredibly high and can be hard to figure out due to the short-term nature of a payday loan. If extrapolated annually, the rate can be worked out to anywhere from 300 to 1000 percent! Borrowers should obviously proceed with caution.
How no credit check payday loans work
The specifics of applying for a no credit check loan vary from location to location and may differ between online and traditional outlets, but the general process is essentially the same. A borrower will apply for the loan and agree to repay it on payday or in two weeks. The borrower then writes a check in advance for the amount they need to borrow, plus interest and fees. The fees are usually calculated in part in relation to the amount being borrowed. The lender then gives the borrower the amount they are requesting and will cash the check, thus regaining the funds and collecting the fees and interest, on the agreed upon date. The borrower may, in some cases, be able to request a roll over or extension of the loan, but the lender will most certainly apply additional fees in situations like this.
Alternatives to no credit check loans
Considering the high interest rates, the risk of fees, and just the idea that you are spending money you don’t have and spending your pay amount before you even get it, it’s easy to see how payday loans may not be a favourable option for many consumers in need of funds. There are some alternatives available to stay out of this pitfall.
- Credit cards: though you’re still essentially spending money you don’t have, the interest rate for a credit card is far lower than the rate for a no credit check loan, making it an attractive alternative.
- Work with your creditors: if you find you’re consistently overdrawn near the time bills are due and need just one more week, contact your creditors. They can often work with you to change the date your bill is due or possibly work out a more convenient payment schedule. If the monthly lump sum payment is too high, try making two fortnightly half-payments to ease the hit on your check book.
- Budget: being low on funds on a monthly basis could be a sign that you’re overextending yourself. Getting an advance on your pay check and paying additional fees and interest just makes it worse in the end. Instead, take time to look over your budget. Look at what you’re taking in and what you’re spending it on. Eliminate some non-essentials and you’ll be in a much better position between paydays.
No credit check loans can be a life-saving occasional benefit to some borrowers who may just need funds in a pinch. They become a problem when you rely on them, though. If you find yourself taking out payday loans more often than you should, consider the alternatives to get yourself out of the payday loan spiral.
