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The Truth Behind Installment Loans With No Credit Check

If an installment loan with no credit check seems too good to be true – it probably is. Is it really even possible to obtain a no credit check installment loan? Well yes it is possible, but be prepared to pay a huge premium for the added risk. A so-called no credit check installment loan offer often turns out to be a payday loan in disguise.  The advantages of such loans are more than overshadowed by their drawbacks.

short term installment loansLoanNow does not claim to provide a no credit check installment loan. We base our lending decisions on a superior risk-based underwriting system that produces far fewer defaults than payday loans.  As a result, we can provide a real and personal installment loan that is much less expensive than a payday loan disguised as a no credit check installment loan.

How Payday Loans Work

Payday lenders generally do not conduct credit checks through the three major credit reporting bureaus: TransUnion, Equifax and Experian. Instead, many payday lenders base their lending decisions almost solely on whether applicants have reliable income sources. In exchange for their lax underwriting standards, payday lenders demand high interest rates and extremely short repayment periods from their borrowers.  How high and how short? It’s not uncommon for payday loans to carry interest rates and APRs well into three digits, with repayment periods as short as a week or 10 days!

It’s not difficult to imagine that many borrowers find it difficult to repay their loans on their original due dates. Payday lenders have a structure in place to address this circumstance. Rollovers allow borrowers to make partial payments on their payday loans; the remainder is refinanced – rolled over – into a new loan with a new set of interest charges and administrative fees attached.  The new loan carries the same short repayment period as the original loan, putting the borrower in the same nearly impossible position. It’s a vicious cycle of debt.

How Payday Installment Loans Work

Installment loans are repaid by the borrower in regular installments that include interest and a portion of principal. Most installment loans require some type of credit underwriting. Secured loans such as car loans often require less stringent underwriting, while so-called signature loans often require stringent credit checks.

With so-called payday installment loans, no credit check is conducted through the three major credit reporting agencies.  The underwriting procedure is the same as with conventional payday loans. But instead of requiring a single lump sum payment at the end of the repayment period, borrowers must make two or more payments, usually within a repayment period that is nearly as short as that for conventional payday loans.  With a payday installment loan, no credit check translates into the same sort of trap associated with conventional payday loans.

How Real Installment Loans Work

Investopedia defines an installment loan as a financial obligation that “is generally repaid in equal monthly payments that include interest and a portion of principal.”  The most common types of installment loans include car payments and mortgages. But these types of loans always require a credit check.

By this definition, calling a payday loan a no credit check installment loan is misleading.  While it’s true that many payday lenders don’t use conventional credit checks, the loans they offer do not qualify as installment loans. The short repayment periods for many payday loans combined with high interest rates makes it impossible for borrowers to maintain the specified payment schedule.  Many payday loans that are labeled as installment loans have repayment periods that are only slightly longer than those for conventional payday loans and are frequently offered in states that have placed restrictions against payday lenders.

If a borrower cannot pay the full “installment” on the due date, the loan is renewed, just like a regular payday loan. Future payments are increased to reflect the new, higher balance.  Payments made by borrowers are frequently applied only to interest on the loan, with little or no reduction in the principle.  As a result, borrowers frequently pay many times the amount of the original loan before their accounts are finally paid off.

installment loansThe LoanNow Difference

LoanNow provides real installment loans, with repayment plans that apply payments to both interest and principle.  Borrowers who run into trouble can consult with our loan professionals to devise a plan to get back on track. And borrowers who maintain consistent on-time payment records are rewarded with higher LoanNow credit scores that qualify them for lower interest rates on future loans.

So, while LoanNow does not offer a “no credit check” installment loan, our superior underwriting system allows us to consider an applicant’s entire financial profile rather than relying on FICO scores alone. Many borrowers who have been turned down by banks are pleased to be approved by LoanNow.  If past credit problems such as a serious illness or similar setback have put a few nicks in your credit profile, we may be able to provide the money you need while guiding you toward a brighter financial future!

LoanNow offers real installment loans with an application process that is as convenient as a payday loan and repayment periods as manageable as bank loans. We don’t make you wait weeks for a lending decision. We don’t subject you to endless rollovers that can jack up the amount that you owe. Why not experience the LoanNow difference for yourself?

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* Funds will be distributed via ACH. Most banks will post the funds to your account by the next business day. Subject to underwriting approval.

** Subject to online availability and underwriting may request additional items prior to final approval.

† Loan approvals are subject to underwriting criteria and the approval process may take longer if required items are not able to be verified online or additional items are requested.

‡ Funds will be distributed via ACH. Most banks will post the funds to your account by the next business day. One’s bank will determine when funds are actually available.