A recent report from Equifax found that the average non-mortgage debt per Canadian is more than $21,000, an increase of 2.4% from Q2 2021. The rising cost of living coupled with inflation are the biggest drivers of increasing debt.
Yet higher debt loads often lead to lower credit scores. So if you’ve been falling behind on your finances, you may wonder what you can do to finally get ahead. The answer for you could be no-credit-check loans.
Keep reading to learn everything there is to know about no-credit-check loans.
No-Credit-Check Loans Explained
No-credit-check loans are fast loans with an online application and, often, same-day disbursement. They are a type of personal loan that doesn’t require a traditional hard credit check by the lender. A hard credit check involves carefully examining the following:
- Your loaning and repayment history
- Previous defaults or delayed payments
- Overall credit utilization
- Other vital financial records
Personal loans typically require lenders to perform a hard credit check to evaluate the borrower’s creditworthiness, as every loan you borrow is recorded. But with a no-credit-check loan, you can forgo this step. Instead, your lender will conduct a soft credit check.
A soft credit check is when the lender examines other aspects of your finances that don’t play a determining factor in your credit score. These factors include:
- Current employment
- Current income statures
- Unpaid loans with other companies
- Recent repayment history
- Educational background
There are several types of no-credit-check loans for borrowers to consider.
Payday Loans
Payday loans are small, short-term loans that often have a repayment period of two to four weeks. They were designed to help consumers get by until their next paycheck.
You’ll receive a loan based on your earnings, and lenders recoup the principal, plus interest, from your next paycheck. However, if you miss a payment, you can face high penalties.
Personal Installment Loans
Personal installment loans are similar to payday loans, but you can borrow larger amounts, they have better terms, and they have a longer repayment period. In addition, because the repayment period is several months instead of weeks, the monthly installment is smaller.
This is often more manageable for borrowers because you don’t have to pay back the entire loan at once.
Auto Title Loans
Auto title loans use your car as collateral, making them secured loans. You give your car title to the lender in exchange for cash.
The limit of your loan will depend on the value of your car. Lenders often allow you to drive the vehicle as you pay off the loan, but you’ll want to check the terms and conditions before signing the contract.
Beware: if you default on a car title loan, the lender can repossess your vehicle.
Secured Credit Cards
Traditional credit cards are unsecured, which means it can be hard to qualify if you have a bad credit score. Since there is no collateral, lenders of unsecured credit cards only want to loan money to trustworthy borrowers.
Yet, with a secured credit card, you make a cash deposit, which becomes your cash limit. The card issuer will keep your deposit if you fail to make your payments.
Some lenders don’t require a credit check for secured credit cards.
Co-signer Loans
Even with a no-credit-check loan, you may still be ineligible for the loan for other reasons.
If so, you can ask a trustworthy family member or friend to co-sign a loan with you. If your co-signer has good or excellent credit, you have a better chance of getting approved for a loan, and you will probably get a better interest rate.
However, you must ensure you make your payments on time so that your co-signer doesn’t become responsible for them.
How to Get a No-Credit-Check Loan
Many financial institutions and leaders offer no-credit-check loans. Thus, you’ll want to research your options before applying for one of these loans.
Although the application process is simple, applying for too many of these loans in a short timespan can flag you as a risky borrower to lenders, even if they aren’t pulling a hard credit check on you.
Once you’ve found a reliable lender, head to their website to begin the online application process. You will need to provide personal information such as:
- Name
- Date of birth
- Address
- Employment
- Income
- Bank details
The lender will review your application, perform a soft credit check, and assess how much money you should receive. Once approved, the lender will immediately disburse the funds to your account.
No-Credit-Check Loan Requirements
Although each lender will have its own unique requirements, there are some similarities. Standard requirements include the following:
- Aged 18 years or older
- Canadian resident residing in Canada
- Own a Canadian bank account
- Have stable employment
- Meet the income threshold
- Have little to no “insufficient funds” transactions
- Not facing bankruptcy
- Have a low ratio of short-term debt
Each lender will have its specific requirements posted on its website, so you can know whether you qualify before applying.
When to Consider a No-Credit-Check Loan
You can apply for a no-credit-check loan if you don’t have a great credit score and believe you won’t get approved for other short-term loans. However, there are some specific circumstances when you should consider this type of loan. They include:
- Medical bills.- focus on your health
- Childcare – pay for education until finances improve
- Business expenses – give your business an extra boost
- Consolidating debt – focus on paying one lender instead of multiple
Regardless of your situation, always review your finances to ensure you can make payments on your loan before receiving the funds.
Apply for a Loan
No-credit-check loans can be a great way to secure fast, online loans for those struggling with their credit score. Should you meet all the eligibility requirements, give the no-credit-check loan a try today.
For fast loans in Canada, apply now at EasternLoans. The application takes less than five minutes! Already a customer? Renew your loan today.