If you need some quick cash, you might consider a “no credit check” personal loan. Having access to personal loans with no credit check required can seem like an attractive option, especially if your credit isn’t great or you’ve been rejected for other types of loans in the past.
But is getting cash this way really a good idea? Probably not — here’s why.
Credit check vs. no credit check
When you borrow money, the lender typically checks your credit before approving you. This informs lenders about your creditworthiness — in other words, how responsible you are with making payments on time.
“A credit check is an important part of any lender’s underwriting process,” said Ian Atkins, an analyst at Fit Small Business. “It will help them determine a fair price for your loan based on key indicators of likely default.”
If you have good credit, you’ll likely get competitive interest rates. If you don’t, your interest rates could be sky-high. Worse yet, you might not even be approved for a personal loan.
That’s where a no credit check personal loan comes in. They’re appealing because your credit won’t get in the way of you getting some much-needed cash.
“Personal loans that have no credit check may seem like a wonderful idea, especially for people who have an imperfect credit history,” said financial coach Maggie Germano. “Unfortunately, those offering personal loans with no credit check are not looking out for a borrower’s best interest. In fact, they use predatory practices that harm a borrower in the long run.”
For people who have extenuating circumstances with less-than-stellar credit, personal loans with no credit check required may be one of the few options available — but that doesn’t mean they’re a good idea.
How no credit check personal loans work
Online personal loans with no credit check required are available to consumers everywhere. You might be able to borrow a couple hundred to several thousand dollars. The loan amount and repayment terms vary by state.
If you fill out an application, you’ll probably get approved instantly. Seems great, right? You can get quick cash transferred to your bank account when you need it.
But don’t let the easy approval fool you. These no credit check personal loans can be a financial trap.
Personal loans with no credit check are a bad idea
Personal loans that don’t have a credit check typically have exorbitant interest rates and high fees.
Since these companies don’t use your credit to determine if you are worthy of a loan, they take on more risk when lending money. Because of that, they charge out-of-this-world interest rates.
How much exactly? It depends on the company and the repayment terms, but if you calculate the fee as an annual percentage rate, it could turn out to be several hundred percent. In fact, many personal loans with no credit check come with a 200% to 400% APR.
“Without running credit checks, a lender has to make so much money off their loans that they can cover a higher potential for loss,” said Atkins.
You might take out a small loan to cover an emergency expense like a car repair, but if you can’t pay it back on time you could end up paying a lot more.
“If you take out one of these loans and are unable to pay them back quickly, you will end up owing double or triple of what you borrowed in the first place,” said Germano.
Alternatives to personal loans with no credit check
If you’re in need of cash ASAP, what else can you do? You might consider applying for a small loan from a credit union. These should offer low interest rates and fair repayment terms. But you will still need decent credit for approval.
You can also check out a reputable personal loan lender that checks your credit before approving you. Though taking out a personal loan for emergencies is not ideal, using a lender that does have a credit check can be a safer bet.
For example, online personal loan lending platform Avant offers personal loans that can range from 9.95% to 35.99%. If you have poor credit you’ll likely be on the higher end of the spectrum, but that’s still preferable to having an APR in the triple digits.
The safest bet is to use cash you have on hand. If your funds are limited, start saving for an emergency fund. That cushion could help you avoid predatory lenders and you won’t need to take out a loan just to make ends meet.
“Avoid no credit check personal loans and payday loans at all costs,” said Germano. If you’re looking to get quick cash to pay off other debt, Germano suggested looking into debt counseling before taking on additional loans that aren’t in your best interest.
Take out a loan for the right reasons
You don’t want to put out one fire and create another one. Make sure you’re taking out a loan for the right reasons. If it is truly a need, find a reputable lender that can offer reasonable terms.
Is your credit too poor to get a legitimate loan? Follow these tips to safely get a personal loan with bad credit.
Interested in a personal loan?
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How Student Loan Hero Gets Paid
Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.
Student Loan Hero Advertiser Disclosure
Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.
| Lender | RATES (APR) | loan amount | |
|---|---|---|---|
 | 5.74% – 20.28%1 | $5,000 to $100,000 | |
 | 4.37% – 35.99% | $1,000 to $50,000 | |
 | 5.94% – 35.97%* | $1,000 to $50,000 | |
 | 99.00% – 199.00%2 | $500 to $4,000 | |
 | 5.99% – 24.99%3 | $5,000 to $40,000 | |
 | 9.99% – 35.99%4 | $2,000 to $36,500 | |
| compare rates on Lendingtree now | |||
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi DisclosuresFixed rates from 5.74% APR to 20.28% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 1/18/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Opploans DisclosuresDirect Deposit required for payroll. Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.
Payoff Disclosures
LendingPoint Disclosures
Upgrade Bank DisclosuresPersonal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/. | |||
