This means you’ll have an even bigger hurdle to clear next time. So they offer a handy trick: If you can’t pay your loan back, you can roll it up into a new loan, so you’ll essentially get an extension for an additional fee. Payday loan lenders know these loans are expensive, and that there’s a decent chance you won’t be able to pay. However, there are cases where you can end up paying that high APR for even longer (even six months or more as in the above example), which brings us to our next point. It’s high costs like these that many people consider criminal, which is why some states prohibit payday loans.īecause payday loans only last until your next payday, term lengths are generally about two weeks, not six months. The difference between having good credit and relying on payday loans in this case is $706.25 more in interest-more than you even borrowed in the first place. Here are what three different $500 loans will cost if you pay them back over a six-month period: Those numbers can seem abstract, so it’s helpful to see what it actually means for your wallet at the end of the day. With payday loans, for example, you’ll often be charged around 400% APR-over 10 times as high. Many loans for bad credit charge APRs of around 30%. If you’re comparing no-credit-check loans with regular loans for bad credit, though, it’s a difference of whether you want a high rate, or a sky-high rate. If you don’t have great credit, you’ll have to pay more for any loan than someone with better credit, unfortunately. Here are four things you should know before applying for one. Why No-credit-check Personal Loans Are DangerousĪlthough no-credit-check personal loans are convenient, they can hold you back or even be dangerous in some cases. They’ll usually give you a ticket with your cash, which you’ll need when you repay the loan in order to get your pawned item back. Pawn shops sell items, and they give out short-term pawn loans too. Some online lenders don’t specifically offer payday loans or auto title loans, but they still offer no-credit-check loans. Lenders who trade you an expensive loan for your car’s title can be found online, or they may have storefronts in your community. Payday loans generally last until your next paycheck, charge extremely high interest rates and offer you the ability to roll your current loan into a new one if you can’t pay (for an even higher price, of course). This is what most people think of when they hear no-credit-check personal loan. No-credit-check loans aren’t as common as traditional loans however, you can still apply for one through various institutions, including: Who Offers No-credit-check Personal Loans? Auto title loans are another type of no-credit-check loan where you’ll leave your car’s title (and possibly even a set of keys) with the lender until you pay off the loan. You’ll then get your item back when you repay the loan. For example, you might need to leave something of value with a pawn shop to get a pawn shop loan. Some no-credit-check lenders also require you to pledge collateral-a personal asset you use to secure a loan and one the lender can repossess if you fail to meet the repayment terms. For instance, lenders can check your bank account statements or past pay stubs to see how much you earn with each paycheck and how much loan you can afford. No-credit-check loans, on the other hand, are given out based on your ability to repay the loan. They then use this information to help qualify you for a loan and establish your interest rate. Most loans require a credit check so lenders can see how well you’ve managed past debt. What Is a No-credit-check Loan?Ī no-credit-check loan is exactly what it sounds like. Here’s why no-credit-check loans are dangerous, and several better types of personal loans and options you can use if you need cash. They may seem like the perfect solution to your financial problems, but no-credit-check loans are very expensive and can leave you in a worse position than you started. When you need money fast and have damaged credit, ads for no-credit-check loans can be tempting.
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