No credit check loans – There are better alternatives
If you’ve had financial problems in the past, you’re not alone. Many people have struggled to repay loans, and now have a bad credit rating as a result. This can have dire consequences for future purchases, with banks and other financial institutions considering you a risk given your history.
The knock on effect of loan application rejections is the feeling of being alone, with few options available to secure the purchases you need. This in turn leads to a lack of confidence in yourself, before heading down a path that potentially does you more financial harm than good.
No credit check loans are an option for people who don’t believe they have anywhere else to turn if they need to buy a car, or require cash for an important purchase. However, while they are an option, they are rarely the best solution.
What’s wrong with a no credit check loan?
As the name implies, finance providers who offer these services require no credit checks before approving your loan application. Literally anyone of legal age can secure no credit check car loans, no credit check personal loans, and a variety of other loans regardless of their credit history.
The temptation to apply for a loan of this nature is obvious, it’s an easy option when you think there aren’t any other avenues to explore. But there are many dangers to securing a loan in this way:
- High interest rates – Because the risk is so great, the interest rates you’ll be subjected to can be enormous.
- Large down payments – Again, because the risks are so high you will often be asked to make a big initial financial contribution to the purchase.
- High fees – Once locked into lengthy terms, you will most likely be charged expensive establishment and early exit fees, making it cost-prohibitive to pay off your loan earlier if you were able to.
- Security – You will almost certainly be asked to offer personal property as security for the loan, so if you can’t pay it back the collateral could be repossessed.
- Length of loan – No credit check loans often have long repayment terms, so you’ll end up paying much more than the value of the purchase over the life of the loan.
- Direct debit repayments – You may be forced to set up direct debit payments, and should your account have insufficient funds when payment is due, hefty penalties may apply.
- Lack of freedom – No credit check car loan providers will expect a big say in the vehicle purchase, and may refuse to finance your preferred option.
As you can see there really is only one winner in this sort of arrangement. The loan provider will make large profits from exorbitant fees, high interest loan repayments, potential default penalties, and a large initial lump sum down payment.
At best you’ll end up with a slightly better credit rating and a car that isn’t worth anywhere near how much you paid for it; at worst you’ll have dug an even bigger financial hole for yourself with nowhere else to turn.
If a no credit check loan is bad, what are your options?
Bad credit loans are slightly different to no credit check loans because to be approved there are checks and balances to be conducted.
However as the name suggests, bad credit loans are designed for people who have had financial difficulties in the past, but want a chance to improve their credit rating without the incredible risks associated with no credit check loans.
People often find that they can still get cheap car loans even though they did think they might have bad credit. The key is speaking to a broker, who can do a full assessment for you before any loan applications are made.
Positive Lending Solutions have been helping people with bad credit histories secure bad credit loans for many years. There are numerous benefits for the consumer in securing a bad credit loan through an experienced finance broker:
- They will conduct a thorough search with many reputable banks and financial institutions for the best bad credit loan for you. With a no credit check loan provider, you literally have one choice.
- While interest rates may be slightly higher than loans for people with a good credit history, they won’t be anywhere near as high as no credit check loan interest rates.
- You will have a large say in the flexibility of the loan, such as repayment amounts and the length of the loan.
- You’ll repair your credit history and be in a stronger borrowing position for future purchases.
- Professional finance brokers will have a far greater chance of securing the best bad credit loan deal on the market than you.
- It’s possible to refinance your bad credit loan during the life of the loan if you can prove your financial situation has improved.
- We can help you find the perfect car for you and negotiate the best price, saving you money, and organise the best insurance to give you peace of mind if something does go wrong.
What should you do next?
The best course of action is to speak with an experienced, fully qualified professional who can help you get the best deal for you and your family.
At Positive Lending Solutions there is no obligation to proceed if you don’t think a bad credit loan is for you, but information is power and unless you have a clear understanding of your options, you can’t make informed decisions.