Can You Get a Loan Without a Credit Check?

When facing unexpected expenses or cash flow challenges, traditional lending options may feel out of reach for borrowers with poor credit or no credit history. Several types of loans are available without a credit check, though some of these options come with important considerations regarding interest rates, fees, and terms.

Key points

• Loans without a credit check provide borrowing options for people with poor credit or no credit history.
• Some types of no-credit-check loans can come with higher interest rates and additional fees compared to other types of loans.
• Alternative loans and credit products are available for people with poor credit who need a loan.

How no-credit-check loans work

No-credit-check loans are financial products that lenders approve without reviewing the borrower's credit history or credit score. Because these loans don’t rely on credit information, and borrowers with bad credit or no credit history are typically considered higher risk, lenders often charge higher interest rates and extra fees for them.^[1]

Types of no-credit-check loans

There are a few different types of no-credit-check loans that you can access; take a look at some examples below.

Payday loans

Payday loans are short-term, high-cost loans typically under $500 that are designed to be repaid with the borrower's next paycheck. The CFPB defines payday loans as loans that are generally due on the borrower's next payday, with terms typically lasting two to four weeks.
These loans carry exceptionally high costs. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%, compared to credit cards, which typically range from 12% to 30% APR.^[2]

Car title loans

Title loans, sometimes called "pink slip loans," enable borrowers to obtain between 25% and 50% of their vehicle's worth by using the car title as security for the loan. These financial products are legally available in 25 states, while 12 additional states permit them under certain restrictions.^[3]

Data from the Consumer Financial Protection Bureau indicates that approximately 5.2% of consumers utilized auto title loans during 2023.^[4]

These loans generally begin at $100 and must be repaid within 15 to 30 days. According to Bankrate, approved borrowers may receive their funds within 24 hours, with some lenders disbursing money even more quickly. The qualification process tends to be straightforward, with many lenders imposing minimal or no credit score requirements.

If you live in one of the states where car title loans are permitted, you will need to own your car outright in order to get a loan, though you could be approved if you only owe a small amount.^[3]

Pawn shop loans

Pawn shop loans are secured loans that require borrowers to provide valuable items as collateral, such as jewelry, musical instruments, electronics, or antiques. According to SoFi, pawnshops typically offer 25% to 60% of an item's resale value, with the average pawn shop loan being approximately $150 with a term of around 30 days.

The loan process is straightforward and immediate. Borrowers bring their valuable item to the pawnshop, receive a loan offer based on the item's worth, and can walk out with cash immediately upon agreement. No credit checks or income verification are required beyond proving ownership of the item to avoid dealing in stolen goods.

Unlike traditional loans, pawnshops do not charge interest but instead impose financing fees that can be substantial. These fees can result in annual percentage rates of 200% or more when converted to APR terms, significantly higher than the average personal loan APR of 12.21%. For example, a $125 loan on a $500 necklace might incur a 25% financing fee, totaling $31.25 in additional costs, meaning you would have to pay $156.25 in total.^[5]

Risks and considerations for no-credit-check loans

There are a number of potential risks that come along with no-credit-check loans. It’s important to consider these risks and the limitations of these types of loans compared to other credit products.

Higher costs compared to other types of credit

No-credit-check loans typically carry significantly higher costs than traditional credit products. The combination of high fees and short repayment terms can make these loans expensive, particularly if borrowers cannot repay them promptly.^[6]

Limited loan amounts

Most no-credit-check loans offer relatively small amounts, which may not be sufficient for larger financial needs.

Potential for asset loss

Secured no-credit-check loans, such as title loans and pawn shop loans, put borrowers' assets at risk. Failure to repay these loans can result in the loss of vehicles or personal property. ^{[3] [5]}

Pros and cons of loans with no credit check

It’s important to be aware of the potential issues that can arise from using no-credit-check loans, although they can have benefits in certain situations. Take a look at the advantages and disadvantages of these types of loans below.

Source ^[1]

Making informed decisions about no-credit-check loans

Before considering a no-credit-check loan, borrowers should consider doing the following:

• Explore alternatives such as credit union loans, employer advances, or assistance from family and friends
• Carefully review all terms and conditions, including interest rates, fees, and repayment requirements
• Ensure you have a clear plan for repayment to avoid rollovers or extensions
• Consider whether the immediate need for cash justifies the high cost of these loans

While no-credit-check loans can provide access to funds when traditional credit is unavailable, they should be used cautiously and as a last resort due to their high costs and potential for creating debt cycles.

Alternatives to no-credit-check loans

While no-credit-check loans might have advantages in certain situations, there are other options you might want to explore before opting for a loan that requires no credit check.

Payday alternative loans (PALs)

Some federal credit unions offer Payday Alternative Loans (PALs) as a more affordable option for members who need short-term financing. The National Credit Union Administration allows federal credit unions to offer PALs with amounts ranging from $200 to $1,000 and terms from one to six months. These loans are capped at a 28% APR, significantly lower than traditional payday loans.

To qualify for a PAL, borrowers must be credit union members for at least one month and can receive up to three PALs during a six-month period, with no overlapping loans.^[7]

Employer payroll advances

Some employers offer payroll advances (or paycheck advances) to employees, allowing them to access earned wages before their scheduled payday. These arrangements typically involve minimal fees and are repaid through future paychecks.

For example, an employee might ask their employer for a payroll advance if they receive an unexpected car repair or hospital bill that they cannot pay. The employer can then lend the agreed-upon amount, and the employee must pay it back through deductions on their next paycheck. Employers can charge interest on these loans to cover administrative fees, but they are typically not allowed to make money from the loan.^[8]

Credit union emergency loans

Some credit unions offer emergency loans to members with more favorable terms than traditional no-credit-check loans. These products often require membership but may provide lower interest rates and more flexible repayment options.

Cosigner loans

If you’re unable to be accepted for a loan yourself, you could consider asking a friend or family member whom you trust and who has good credit to be your cosigner. This method can make you more likely to be accepted for a loan with a lower interest rate, but if you miss repayments, your cosigner will be responsible for making the payments on your behalf.

How to establish credit if you have no credit history

If you’re trying to take out a loan but you have no credit history, you might find it difficult to qualify for many conventional loans. There are some things you can do to establish a credit history and improve your chances of qualifying for different types of credit.

• Secured credit cards are an effective tool for building credit when you have no credit history. These cards require a security deposit that typically becomes your credit limit, reducing the lender's risk. When you make on-time payments on your secured credit card, they are reported to the credit bureaus, contributing to building your credit score.
• Credit builder loans work differently from traditional loans as the lender deposits the loan amount into a savings account or certificate of deposit, and the borrower makes repayment over a specified time period. Once the full amount has been paid off, the borrower receives the funds. These loans are designed to help borrowers establish a payment history, which accounts for 35% of your FICO credit score.^[9]
• Becoming an authorized user on a trusted person’s credit card account can help you build credit, provided that the account holder makes on-time payments and keeps their account in good standing.

Bottom line

While getting a loan without a credit check might seem appealing if you have poor credit and you experience unexpected costs, some of these loans can come with higher costs and fees. It’s important to check the terms of these loans, including the interest rates and any additional fees, to ensure you understand them before you take a loan out.

Sources

1. Bankrate, “What is a No-Credit-Check Loan?” https://www.bankrate.com/loans/personal-loans/no-credit-check-loans/
2. CFPB, “What is a Payday Loan?” https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/
3. Bankrate, “How Do Title Loans Work?” https://www.bankrate.com/loans/auto-loans/car-title-loans/
4. CFPB, “Making Ends Meet in 2024” https://files.consumerfinance.gov/f/documents/cfpb_making-ends-meet_2024-11.pdf
5. Sofi, “Pawnshop Loan: What is it & How Does it Work?” https://www.sofi.com/learn/content/pawnshop-loan/
6. Experian. “How to Get a Personal Loan Without a Credit Check” https://www.experian.com/blogs/ask-experian/how-to-get-a-personal-loan-without-a-credit-check/
7. My Credit Union, “Payday Alternative Loans” https://mycreditunion.gov/manage-your-money/consumer-loans-credit-cards/payday-alternative-loans
8. ADP, “What is a Payroll Advance?” https://www.adp.com/resources/articles-and-insights/articles/p/payroll-advance.aspx Accessed
9. MyFICO, “How Are FICO Scores Calculated?” https://www.myfico.com/credit-education/whats-in-your-credit-score

About the author

Becca has over 10 years of experience as a content writer, working across various industries including finance, digital marketing, education, travel, and technology. Her work has been featured in publications including Forbes, Business Insider, AOL, Yahoo, GOBankingRates, and more.

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