How to Obtain a Loan Without Credit
There are times where someone might need money and have no choice but to get a loan to pay off things that they cannot afford. This could be due to several situations:
- Emergency medical bills
- Paying off an unexpected ticket or fine
- A debt on a home or car that needs to be paid
- Paying for damages/repairs from an accident
Whether it be any of these situations, getting a loan is usually the answer. That’s because a loan could provide someone with the funding they need to get out of the debt or a financial emergency when they lack the money to do so.
However, there are many people who might not have good credit or are trying to get a loan without credit, which could be a problem as some financial institutions could deny them a loan because of their credit!
Luckily, most anyone could get a loan from other means. In fact, there are many options on a loan without credit that people should consider.
But where to start? Let’s look at the options in which someone could obtain a loan without credit.
Looking at Multiple Options on a Loan Without Credit
Going online, a loan without credit usually boils down to three different kinds of loans. These include personal loans, installment loans, credit cards and car title loans.
Typically, loans that are labeled as personal loans tend to also be known as “unsecured” debt. That’s because the loan tends to not be backed by a collateral, which could range from property or a car.
With personal loans, a credit score does tend to be a contributing factor. However, there are several personal loans available for those who tend to have low credit or no credit.
This is what makes a personal loan usually a safe choice for those in varying income brackets and are conveniently found as an option in places like banks or credit unions.
Like personal loans, installment loans can usually be available in places like credit unions and banks. But what makes them different is that installment loans usually have a fixed monthly payment. Personal and car title loans tend to stretch their options in how monthly payments work, but many installment loans base this off other financial information.
Typically, installment loans tend to be a great option for those looking for a loan without credit but can take a long time to pay off depending on how much someone is able to borrow. Debt-to-income ratio is just one of the ways that installment loans measure how much someone pays in interest.
Credit cards may seem far from the definition of a loan without credit, and that’s because it is another option entirely. In fact, consider credit cards a form of revolving credit. Like a spinning wheel, credit cards provide credit to a consumer based on their income and set it to a max limit.
Every time a credit card is used, the person must pay the balance by the end of the month or be charged interest on that balance. Interest is just another word for “more money” that someone could expect to pay. The more interest someone accrues, the more money they owe to their credit card company.
However, if one needs to pay off small debts in a hurry before their next paycheck but don’t have credit, then a credit card might be just what they need. Not to mention that owning a credit card is one of the many building blocks in establishing a credit score.
That’s right! The more someone spends with their credit card (and pays it off on time), the more their credit score begins to build up. This means more opportunities and options could be opened to a consumer if they use their credit card responsibly!
Car title loans
Unlike personal loans, car title loans are a “secured loan” that requires collateral. In this case, car title loans provide a person with funding based on the value of their car. When a car is fully paid off, the title is given to the owner, which is used as the agreement between the lender and the borrower.
Depending on the car make, model, mileage, and other factors of the vehicle, someone could gain a huge amount of funding from car title loans.
Some lenders for car title loans can even pay off the rest of what someone owes on their vehicle to get them the loan. Location also plays as a benefit for those looking for a loan without credit. Through a simple search, over thousands of cities across the country offer title loans, from San Diego to Tallahassee.
Car title loans also tend to be short-term loans and could be paid in less than a year. They are quick, and one of the more approachable options, especially for those who have just paid off their vehicle.
Conclusion: Requirements on a Loan Without Credit
One the shopping and searching over all the options for a loan without credit ends, the necessary documents must be collected! In the case of personal loans, installment loans, and credit cards this could include—
- Employment history
- Social Security Number
- Some form of state identification
- Bank finances
- Pay stubs
However, one should also know that car title loans may also include important vehicle information and other documents that serve the same purpose in verifying that a person can pay off the loan.
One thing that should not stop people from getting a loan is credit, and these options prove that getting the financial help they need can be possible, regardless if one has varying degrees of credit, or none!