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Getting Personal Loans With No Credit Checks: Loan Opportunity For Bad Credit Borrowers
There is a general belief that those of us with really terrible credit scores are bound to be unable to get a loan. But in fact, with the growth of options available from online specialty lenders, it is possible to obtain small personal loans without a credit check.
It might seem like a major risk for lenders to issue loans without checking the applicant’s credit history – and it’s certainly true. As a result, applicants have to make certain compromises if they want to get approved despite having bad credit.
But what are the special conditions that an applicant must accept when applying for this type of personal loan? And how can a lender grant an approval with such confidence when they are clearly exposed to major risk?
No Credit Check: Reckless or Wise?
Any lender who undoubtedly accepts the risk of taking on borrowers with bad credit has clearly already calculated the odds of profiting from the transaction. Remember that no lender enters into a loan agreement with their eyes closed, so providing personal loans without credit checks is a carefully considered strategic lending option.
The simple fact is that statistics consistently show that borrowers are more interested in rebuilding their credit reputation than taking the cash and running. And in any case, a large percentage of borrowers with bad credit today are honest borrowers who fell victim to the economic meltdown four years ago. So, getting approved despite having bad credit is not a major risk.
Additionally, credit scores have never been a major aspect of the approval process, so if any part of it needs to be set aside to expedite access to a personal loan, there is minimal risk involved. to the credit check.
Limitations on loans
But lenders aren’t about to give a $50,000 loan to someone who isn’t fully verified. They set clear limits on the size of the personal loan, with no credit checks offered to small amounts of just $100 to $1,500. In addition, they enjoy very high interest rates to further protect them from losses.
These limits are no mystery, with the lower loan limit ensuring that maximum losses remain low. This means that the offer of approval despite bad credit is really helpful for applicants who need to pay specific emergency expenses or debts. Perhaps a hospital bill or a last overdue mortgage payment notice, for example.
For borrowers, the small loan does little to ease the repayment pressure of these personal loans when high interest rates are charged (25%), and a repayment term is as short as 14 days.
Payday loans and cash advances
The thing is, these loans are better known as payday loans or cash advance loans. Indeed, they are granted against an imminent salary, and not on the basis of a long period of repayments. Offering personal loans with no credit check means approval is almost certain, just proof that the next check is large enough to cover the amount borrowed, plus interest.
Repayments are usually made in one installment, a policy that also protects the lender as there is less chance for the borrower to fall behind or default. Plus, while offering approval despite having bad credit, the likelihood of getting their money back is almost guaranteed.
Still, it’s essential that the borrower budget for the deal, with a $1,500 personal loan requiring $1,875 to repay – a very large sum to take out of a single paycheck.
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