If you have a spotty or non-existent credit history, you aren’t alone – over 20% of Americans had “deep subprime” credit scores in 2017. Just because you have bad credit doesn’t mean you don’t have options for financial flexibility. No credit check financing is a great option for those with subpar credit histories, but it’s important to be careful when pursuing this type of loan.
This post will discuss what no credit check financing means. We will then talk about typical characteristics of this kind of loan, and some things to look out for.
What is no credit check financing?
As the name implies, no credit check financing is when you are able to receive a loan without the lender pulling your credit score. In a typical loan situation, lenders run what is called a “hard inquiry” on your credit. This allows lenders to determine your credit history, but also shows up on your credit score.
The benefit of no credit check financing is that you won’t have one of these credit checks on your report. For those with poor credit histories, it can be tough to get financing from anywhere. Providers that offer financing without a credit check can be a saving grace.
However, before you run to the nearest no credit check financing provider you can find, be careful. Lots of these lenders are predatory loan sharks looking to capitalize on customers who are down on their luck.
The risks of no credit check financing
It’s unfortunate, but many no credit check financing providers are looking to take advantage of customers going through hard times. They offer quick, small loan installments, but charge high fees. Worse, they expect customers to pay them back faster than they can handle.
In late 2017, the Consumer Financial Protection Bureau (CFPB) passed new regulations cracking down on these predatory lenders. Unfortunately, they are still out there, and are more than happy to trap you into a never-ending cycle of debt. When you’re looking for no credit check financing, avoid providers who offer quick payday loans without any form of check or verification.
Finding the right source for a no credit check loan
Even if you know the risks of finding a no credit check loan, you still need to learn how to seek a reliable lender. First of all, realize that few upstanding lenders are going to give you financing, especially a large amount, without some sort of collateral or screening. Put yourself in their shoes: if you were loaning money, you’d want some sort of peace of mind.
However, that doesn’t mean the check has to be credit. Many lenders will allow borrowers to use their business assets as collateral. If you can show that you are owed a certain amount of money from invoices, or have a certain amount of equipment or property, you can get approved for financing.
Other lenders will look at your employment history and education. If they can see that you are typically employed or have the opportunity to be because of your skills and knowledge, you’re more likely to get financing. Remember to look carefully before choosing a specific lender.
What to look for in a provider of financing
Use online review sites to your advantage when seeking a source for financing. Check out their reputation and the things that previous customers have said about them. One wise place to look is the Better Business Bureau, or BBB.
If there have been any formal complaints filed against a specific lender, you will learn about them on the BBB website.
Also be sure to look at the specific products and rates they are offering. What are the terms of the financing? Look at things like:
- The amount of time you have to repay the loan
- The interest the lender is charging, often expressed in APR
- The number of installments you are allowed to make
It’s best to look at multiple financing providers so you will know your options. It may feel like you want to get financing for new equipment or tools as soon as possible, but it serves you best to wait. You don’t want to put yourself or your business in a bad position by getting trapped into financing with unsuitable terms.
If you’re looking for capital to expand your business operations, check out financing providers that specialize in business equipment. You might talk to other people in your industry to see where they have turned for this kind of financing. Also check industry-specific communities, such as forums.
Next steps after receiving financing
Once you have received financing for equipment or business expansion, keep up to date with your loan. Always make payments as soon as you can. If your lender has the option to pay off the equipment early, take advantage of this choice if you have the ability to.
If you run into trouble and think you might not be able to make payments, let your lender know as soon as you can. Most reputable financing providers will be appreciative that you were proactive about your problems. They’ll be happy to work with you and try to come up with a solution that fits both your needs.
Finally, remember to have a plan and stay disciplined enough to stick to it. Most business financing goes awry when companies misuse loans, or don’t execute their strategies the right way. No matter how much of a rush you may be in, it’s always a good idea to spend a bit of time considering how you’re going to disperse the loan funds.
Final Thoughts on Securing Financing
As is the case with many things in life, information is power. The more you can learn about getting no credit check financing and different providers of this service, the better position you will be in. Used properly, this kind of loan can help you expand your business or get the car of your dreams, without worrying about parting with your cash.
At Bonsai, we specialize in offering people as much information as possible about loans and financing. Whether you’re interested in no credit check financing for business or personal reasons, visit our blog to get more info about how to find the best lenders.