No credit check loans can be found online or at storefront locations. And they may come in several different forms. Oftentimes lenders advertise payday loans, pawn shop loans, title loans, and more as “no credit check loans.” But be cautious when considering one of these, as some lenders try to take advantage of borrowers.
A no credit check loan is essentially exactly what it sounds like: a loan that a borrower can receive without having to undergo a credit check. Credit checks are a normal part of a loan application process. It’s when the lender checks your credit score and your credit report to find out more about your borrowing history.
Lenders run credit checks to find out how trustworthy of a borrower you’ve been. If you always make payments on time and you don’t have a lot of debt, then you probably have a decent credit history. This means you’re likely to have a good credit score and lenders will be more likely to offer you a loan and a good interest rate.
With a low credit score, the lender can’t be sure that you’ll repay the loan. They may deny your loan application depending on how low your credit score is. And even if you are approved, you probably won’t be offered a very good interest rate.
Running a credit check is something that most credible lenders do. If a lender isn’t running a credit check, then it’s a good indicator that they aren’t very concerned about being repaid on time. One of the explanations for this would be that they make more money through late payment fees and rollover than they do through on-time payments.
Rollover is a common practice for no credit check lenders. This is the process of extending the borrower’s repayment period and adding more fees and interest. If a borrower can’t repay the loan on time, the lender may offer to roll over the loan to a new term. But because this adds more fees, and a new set of interest payments, it can be difficult to pay this off as well. This means many borrowers have to roll their loans over several times.