The no credit check loan is designed for people with bad credit. People with bad credit tend not to apply for loans they may be able to qualify for simply because they are embarrassed of their credit score. The no credit check loans give these people alternate choices to receive money without the fear that the person will scoff at their credit score. (Honestly, the person behind the desk doesn’t care about your score. He sees a thousand of them a day.)
The most common no credit check loan is used for people to purchase equipment or other toys. The retailers know that they earn enough money from the extra sales to cover the cost of the people who default on the loans. You often see these with stereo equipment, furniture, or other impulse buys.
The next no credit check loan you see is the fast cash or payday cash advance. These amounts are small with a very short payback period. The upfront fees cover the cost of bad loans and the rates and low overhead costs make the profit model work. By not checking credit you open the pool of potential borrowers wider to loan more volume per year.
The final type of no credit check loans that are available are secured loans, these use some sort of collateral to insure the lender against the risk they are taking. Lenders will simply hold the rights to something of greater value than the loan. Similar to a pawn shop, but if done through a potential lender the fees and much lower and the loan value will be better. Anything from jewelry to cars can be used and the rates are often very good (perhaps better than unsecured with good credit scores) because of the high likelihood of making money on the deal.
Don’t use a no credit check loan because you don’t want to know what your credit score is, however, don’t count them out as scams either.
Related posts: