Whether an unexpected bill or repair, circumstances sometimes require your budget to stretch in ways you hadn’t planned. And if you have poor credit or no credit, you may think extra cash is inaccessible. The good news is that there are various financing options available to help you get the funding you need, even with no credit. This article provides an overview of five common options, from payday loans to loans from friends and family. So, let’s dive in.
1. Payday loans
A payday loan is a small sum of money typically borrowed in-between paychecks and paid back with fees and interest in a single payment — usually two to four weeks later. Payday loans are convenient with online applications and quick payouts you can receive electronically. And since there’s no credit check required, even borrowers with no credit can easily qualify. However, interest can be higher on this type of loan, and you’ll need to repay it on time to avoid additional fees.
2. Title loans
A title loan is a type of secured loan where you use your vehicle’s title as collateral for a loan. To qualify, you must provide proof of income, the title of your vehicle, and a valid form of identification. After you trade in your title, you’re typically required to repay the loan within 15 to 30 days, along with applicable interest and fees.
Since a title loan is secured by collateral, you won’t typically need an established credit score to qualify. But be sure to read the terms carefully and pay on time, or you might risk losing your vehicle.
3. Pawn shop loans
Another type of loan that requires collateral — but no credit check — is a pawn shop loan. Pawn shops provide loans based on a percentage of the appraised resale value of items like jewelry, electronics, or musical instruments.
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Terms for repayment are typically 30 to 60 days and include additional fees plus interest, details explained in the pawn ticket you receive when you secure your loan. You must produce your ticket and pay off your loan within the specified term to retrieve the item held as collateral. Failing to do so may result in surrendering your item as payment.
4. Credit union loans
A credit union is like a bank, only member-owned and not-for-profit. Because a credit union is established by the people, for the people, it may offer better rates on loans than traditional banks. If you’re a borrower with no credit, you may find that a credit union is willing to look at factors beyond your credit score, like why you need the loan. Credit unions may also offer loan programs geared toward people building or rebuilding credit.
5. Loans from friends and family
If you don’t have good credit but have supportive friends and family, you may consider asking a loved one for a loan. Remember that when borrowing from someone in your personal life, it’s important to establish clear terms for repayment (in writing if you can). Well-defined expectations can help protect your relationship and prevent disagreements in the future.
Which no-credit financing option is right for me?
When deciding which no-credit financing option is right for you, consider your financial goals, the reason for the loan, and the repayment terms. Make sure the option you choose works within your budget, allowing you to repay the loan on time and without putting yourself at risk financially. When in doubt, talk to a financial advisor or professional before making any decisions.