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Understanding Payday Loans No Credit Check
14 Oct 2019

Understanding Payday Loans No Credit Check. When and How to Use Them

Nowadays almost everything is done online. The same applies to loan applications. Gone are the days when you had to queue in the bank for hours just to submit your loan application form. Currently, modern lenders have taken over the loaning sector as their processes have fewer complications. Payday loans no credit check are some of the most common modern online loans.

What Are Payday Loans?

They are loans you get when you need emergency cash to sustain you until your next paycheck arrives. They are a great alternative when you have an urgent need that cannot wait until you get your salary. You can then repay the cash you borrowed once you get paid by your employer. It is typical for a lender to conduct a credit check. This should nevertheless discourage you from borrowing. It is possible to get payday loans with no credit check.

How do Payday Loans No Credit Check Work?

Is it really possible to get a loan without the lender checking your credit history? Yes and no. To put this into perspective, you need to first understand that there are two major types of credit checks. The first type is the soft inquiry which only involves a light evaluation of your credit file. With this check, zero points are deducted from your credit score.

The other form of credit check is the hard inquiry. This is when the lender performs a deeper and more detailed evaluation of your credit history? For this inquiry, you lose a few points on your credit score. You should be worried about losing crucial points if you already have bad credit. Bad credit lowers your chances of getting big financial backings like when you need a mortgage.

Since these modern lenders do not use your credit score to determine your creditworthiness, they rely on other alternatives. They consider your employment status, for instance, to check whether you have a source of income. This can also include details about your other income sources like a business or government benefits.

How to Apply

To apply, you only have to visit the lender’s website and fill in your details. Since all you need is internet access, you can apply for these loans from the comfort of your home or office. It takes you less than five minutes to apply and you will be approved within a very short period. To qualify, you must:

  • Have attained 18 years of age
  • Be a permanent Canadian resident
  • Have a savings account

Important Precautions

The Chronic Herald run a story which indicated some of the ills brought about by payday loans. Due to the proliferation of these loans, some unscrupulous lenders have emerged. Also, irresponsible borrowing could cause you more financial misfortunes than when you initially sought the loan. As such, it is important to take the following precautions:

  • Check the lender’s reputation. Some lenders seek to take advantage of your financial woes to trap you into vicious borrowing cycles. It works out for them because they get to give you more loans as you pay more interest. As such, ensure that you only borrow from credible financial institutions.
  • Compare several lenders and their terms. Different lenders have different terms, APRs, and lending policies. Do not just take the first deal you find. Compare several companies and only choose those who give you the best deal.
  • Only request for the amount you need. You could easily find yourself borrowing to repay your debts as you get deeper into debt if you take loans recklessly. Have a genuine reason for borrowing the money and only borrow the amount you need to sort out your problem.
  • Ensure that you can afford the loan and have a repayment plan in place. Avoid borrowing an amount you cannot repay. A great tactic would be to calculate all your current expenses to know if you still have some money left to pay back the loan every month.
  • Take the right steps to improve your credit rating. Nothing beats a high credit score when you need financial backing. Most lenders will give you a loan without numerous questions as you have already shown that you pay your debts promptly.

When you need urgent cash, you do not have to wait until you get paid to sort out the problem at hand. You can get payday loans no credit check at the comfort of your home. However, it may be hard to choose a credible lender who has the most suitable terms. At Bonsai Finance, we specialize in linking you up with reputable financial institutions that suit your needs and circumstances. Connect with us today to learn more.