We all find ourselves, from time to time, at a point where we need quick access to additional funds. Perhaps the a utility bill was unexpectedly high this month, or we need to replace the refrigerator that just died on us, or maybe it’s just that we really, really, need to go on that vacation to Hawaii. Whatever the reason, the monetary need (as we see it) is real, and we need the money now to satisfy that need. Unfortunately, as many people quickly learn, getting a small personal loan from your neighborhood bank or credit union is not easy. Traditional lenders want to see an established payment record that reflects a pattern of on-time payments – otherwise they are simply not willing to lend you the money. If you have a poor credit record, or a limited credit history, the options for borrowing money (especially personal loans) are few.
The good news is that there is another option available to people with either a lack of credit or a poor credit history: the buy now pay later no credit check loan. This loan product offers quick and easy access to funds for anyone who receives a steady paycheck. Consumers beware, however, as there can be significant drawbacks in terms of cost that you must weigh in your decision on whether to take out this type of loan.
What are buy now pay later no credit check loans?
Buy now pay later no credit check loans, also referred to as Payday loans, are short-term and relatively small advances on your paycheck. Usually in amounts ranging from $100 to $1,500, this type of loan is available to anyone who has a steady job and regular paycheck, but does not possess the credit or time to obtain a credit card or other type of loan. Since the lender is basing repayment of the loan solely on a future paycheck, no credit background check is required. The result is fast, easy access to short-term loans that allow consumers to buy (or make a purchase) now, and re-pay the loan at a later date, without having to worry about passing a credit check.
The ease and convenience of a buy now pay later loan does come with a high cost, however. For example: to borrow money for a 14 day period, expect to be charged 10-30% of the loan as a loan fee. The standard 15% charge for a one-week buy now pay later loan equates to about an 800% annual interest rate. In the U.S., some municipalities have set limits on the loan amount or maximum interest that can be charged. Some locales have even abolished this type of loan product in an effort to protect consumers from paying exorbitant interest fees.
Lending institutions that make buy now pay later no credit check loans normally require security in the form of a post-dated check. In such a case, the check would cover the amount of the loan plus interest and postdated for the day when you expect to receive your next paycheck.
Who uses buy now pay later no credit check loans?
These types of loans are often thought of as a last resort lending product. Yet, while commonly used to pay unexpected expenses like medical bills or car repairs, they are also often utilized to fund normal everyday expenses until the next paycheck arrives. Financial experts categorize buy now pay later loans as “emergency loans”, cautioning that it’s wise to only use this type of loan in a financial crisis.
Though these loans come with a high cost, they can also serve as a valuable resource for people who do not have a credit card or access to other types of lending. Those with poor credit or no credit history at all can easily qualify for a buy now pay later no credit check loan if they show proof of employment, prove they have the income to pay back the loan, and have a checking account in order to write a postdated check as security.
The downside of buy now pay later no credit check loans
As already mentioned, these loans are indeed an expensive way to borrow money. Interest rates on the loans, when compared to conventional personal loan products, are typically much, much higher. Some states have enacted laws that limit the loan amount of a buy now pay later loan, in a bid to protect consumers’ and minimize their exposure to the high cost products. Not surprisingly, people who are experiencing credit problems and also in need of a short-term loan tend to be those that are most adversely affected by the products high cost.
Clearly, a buy now pay later loan can get help out in a tight financial spot if you do not have any other ways to borrow money. Consumers, when deciding whether to borrow should always weigh the high loan cost vs. the monetary need. Unless it”s a true financial emergency, most financial experts would agree that these types of loans should be avoided.