Can You Trust No Credit Check Loan Companies?

No credit check call outLending institutions are always looking for new ways to make money. Considering their business model, it’s not the easiest job in the world trying to find new people to lend money to. Giving out and servicing loans is a risky venture. These banks and credit unions can end up losing money on loans should the borrower default on the loan. This is the entire reason the government created credit rating agency’s rules and regulations; to ensure that both consumers and banks were protected from risky loans.

Despite the rules and regulations surrounding credit scores and loans, defaults and shady business lending practices persist. We’ve discussed before about the dangers of payday loans. Essentially, payday loans come with enormously high interest rates. These kinds of loans are pushed onto unsuspecting victims, primarily either people who are poor or people who are in dire financial situations. Once someone is trapped in the vicious cycle of a payday loan, it is difficult to get out, and the monthly interest rate payments and fees add up quickly. According to Pew Charitable Trusts, payday fees add up to $7 billion per year.

Even as the government steps up new regulations to limit consumer’s exposure to payday loans, predatory lending companies continually find new ways to offer risky and unfair loans to people. One of these new methods comes in the form of no credit check loans. Basically, some lending companies are offering loans without checking borrowers’ credit history or score, which is very unusual. Often times this is referred to as no credit check installment loans. These lenders can offer different rates and term if they do not first provide a credit check to those they are lending to.

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No credit check installment loans are just payday loans of a different sort. The name is different, and the exact terms are slightly different, but the risks and impacts are similar. What these lenders offer is easy money by distributing the loans as quickly as possible and forgoing the credit check process. The payment structure is usually a weekly or bi-weekly system, sometimes longer, whereby the borrower immediately pays back the loan. It seems beneficial to some. Maybe you need quick cash before a big payout you’re expecting and you’re hoping to use one of these lenders to speed up your payment timetable. But trust me, you shouldn’t make this judgment error.

Take a look at one of the more popular no credit score installment loan companies. This company allows you to look at its payment structure. According to this installment loan company, an $1000 loan over a six-week period would require a $165.18 bi-weekly payment. This means that after borrowing $1000, you would be on the hook for $1982.16 in total. Additionally, you would have to begin paying back that loan almost immediately and on a regular schedule. In Wise Loan’s terms and conditions, they claim to offer APR of between 299.96 percent and 364.8 percent, which is astronomically high. Should you miss one of those payments, the amount that you owe would skyrocket. Companies like Wise Loan are merely payday loan companies in disguise. As we suggested in our other articles, companies like this should be avoided at all costs. I can’t think of one good reason for someone to take a loan with such an enormously high interest rate. In fact, no credit check installment loans may be worse than payday loans because they require earlier and more frequent repayments.

Posted on April 13, 2016 by in Personal Loans

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