No Credit Check Loans. Have you ever received a loan offer without a credit check from the lender? If by chance your credit is bad then that’s good news. Is that right? The answer: Not true! This loan is only slightly better than a payday loan or a car loan. No credit check loan charges an annual interest rate of 100%. The simple Dollar reported that the loans
with annualized interest rates well north of 100%. Of course this interest rate is very strangling neck. This is why you need to avoid no credit check loan.
What is No Credit Check Loan?
The US government, through the State Legislature, has actually acted decisively against cunning practices on car loans and salary loans. However, lenders seem to be smarter. They then came up with new faces and ways to offer similar services that did not break the rules. Some people refer to this type of new loan as a payday installment loan because of its overall similarity with payday loans. Just like a payday loan – the difference is that the payday installment loan is paid back in installments rather than at once.
Interest rates can reach 36%, depending on where you live – and that is an improvement when the APR payday loans often rise to 100%. However, interest of 36% is still sky high. Since interest rates are often raised, the actual interest rates will again reach hundreds of percent – the same as the interest rates applied for payday loans and car loans. On other occasions, lenders often anticipate laws that prohibit high interest rates only by charging higher fees, but effectively interest rates and loans remain equally expensive.
Is There a Better Option to Borrow?
The question is, do you have other better choices when you really need cash but you don’t want to be trapped in a miserable lender? Here are some borrowing institutions that you can use.
Credit Unions: In terms of requirements, credit unions tend to be less strict than commercial lenders – even if you have a bad credit history. The services provided are similar to no credit check loans, small loans and short term loans, but do not charge high interest rates and fees. Credit Unions are also more cooperative in determining payment terms according to your ability.
Online Lenders: Online lenders fill the market vacuum that commercial lenders do not enter. The online lender’s highest interest rate is 36%. This is much lower than the effective interest which is subject to no credit check loans that can reach 400% or even higher.
Credit Cards: If you have a bad credit record or don’t have a credit card at all, you will find it difficult to get a loan through a credit card. If you have it, it can help you overcome your financial difficulties. Two-digit interest rates are indeed high, but are still better than owing to the no credit check loan. You can use your credit card to pay a number of bills. In fact, some credit cards offer cash withdrawals at no charge. However, interest charged for cash withdrawals is higher than used for purchases.
Communicate: If you need cash quickly to pay rent, credit cards, car loans, or utility companies – immediately contact a lender or a person who can lend money. Tell us about your financial problems, whether they can adjust your payments that have been delayed.
How to Avoid Trap?
From now on, you should try to avoid the trap of lenders who want you to always be in debt to them. There are two things you can do to prevent you from avoiding confusing debt traps.
Increase your credit score: You can increase your credit score by using credit responsibly. Reducing the amount of debt on a credit card is one of the easiest and fastest ways to increase your credit score. In addition, you must make payments on time.
Emergency funds: An emergency savings fund equivalent to three to six months living expenses can overcome your financial problems. You will not be confused with emergency costs for something unexpected like a health emergency, education emergency, or emergency trip. You have the backing to avoid falling into high-interest debt.
From now on do not ever think of getting in touch with “predatory” lenders – even though they offer assistance on terms made easier. Because, once you enter the circle, you will find it difficult to get out.
How Does Credit Check Credit Work?
Be careful, if there are lenders offering you loans without seeing your credit at all, they might be “killing” payday loan or “predatory” lenders. Such lenders offer loans with a very high annual percentage rate (reaching more than 350%) and the time period is very short (usually only 2-4 weeks). This combination of high interest rates and short-term time makes it almost impossible for borrowers to pay off.
They know you have a hard time repaying a loan. But they dare to give a loan to you. Why? Because loans like this are intentionally designed to trap borrowers into the debt cycle through actions called rollovers (a persistent pattern of “extending” loans while issuing new fees and interest fees, www.opploans.com). That means you continue to pay and pay, and what is paid is only interest – not the loan principal.