When in dire financial need, say to repair your car that has broken down or to sort any other unforeseen expense, you want a fast source of cash. You also would want an option that does not have a lengthy application procedure and lots of requirements.
However, these loans can come with some downsides despite sorting you out during urgent financial needs. It would help if you acquainted yourself with all that pertains to this type of credit before taking it to make a wise decision.
Below are some pros and cons of the no credit check loan that will help you understand it better.
Pros
The key advantages of this credit finance include:
Not Mandatory to Have Good Credit
Most probably, if your credit score is good-a fico score of 680 and above- you would not go for a no credit check loan but would go to the conventional loans like from banks. Fortunately, you can still access funds with bad credit through these kinds of no credit check loans. The providers of these loans fill the gap left by traditional lenders of lending to folks with poor credit history.
Fast Turnaround
These loans are intended to be a form of bridging the gap between one paycheck and the other. They are, therefore, perfect at putting cash in your hands pretty fast. Most of these loans can hit your account in 24 hours or within the next business day, thus help borrowers meet their urgent financial needs.
Easy Application and Repayment
Since most of these loans are applied online or via mobile phones, they are convenient as there are no trips to banking halls or lots of paperwork. The repayment is also easy because applicants usually have a check or saving accounts with lenders; hence the payment is deducted directly.
Cons
Below are some disadvantages of no credit check loans:
Higher Interest Rates
With lenders issuing these loans to higher risks borrowers because they mostly have a bad credit score, the interest rates must be higher than those charged by traditional lenders. There may also be other charges that add up to the cost of the loan.
Do Not Build Your Credit Score
Repayment history is the critical factor that contributes to your credit score, with a contribution of 35% of your overall rating. Unfortunately, most lenders of no credit check loans do not report borrowers’ payment patterns to credit bureaus. As such, borrowers do not improve their scores for timely payments.…