Can You Get Installment Loans With No Credit Check?

An installment loan is one of the most common ways to borrow money. They let you spread your repayments over a long period in manageable chunks. 

Many personal loans are paid back in installments, and it is possible to get one without the lender performing a hard or soft check on your credit report. 

Key takeaways

• Installment loans let you borrow a lump sum and repay it in fixed, predictable amounts.
• No-credit-check installment loans are an option for people with poor credit, but they may be more expensive than other products.
• Lenders can look at your income and bank accounts to assess your affordability.
• Alternatives to no-credit-check installment loans include guarantor, secured, and credit builder loans.
• Budget carefully to make sure you don’t fall behind on your payments.

What is an installment loan?

An installment loan allows you to borrow a lump sum of money upfront, and pay it back in fixed, regular payments over an agreed period of time.

They are designed to cover a large purchase or expense and spread the cost in manageable installments over several months or years. 

Examples of installment loans

Installment loans are a very common type of borrowing. Several types of loans fall under this category, including:

• Personal loans
• Auto loans
• Mortgages
• Secured loans
• Student loans
• Home equity loans

How do installment loans with no credit check work?

When a lender advertises an installment loan as ‘no credit check’, it means they won’t perform a check on your credit report or look at your FICO score as part of your application.

Alternatively, they assess affordability by looking at:

• Your bank account details
• Employment status
• Income
• Financial obligations

For this reason, they tend to be marketed at borrowers with poor credit who may fail a credit check. No-credit-check installment loans typically have higher interest rates because they are considered a higher risk to the lender. 

Soft vs hard credit checks

A soft credit check is often used as a preliminary review of your credit report that doesn’t impact your overall credit score. Lenders may perform a soft credit check as part of a loan application process.  The soft credit checks provide lenders an overview of your creditworthiness without impacting your overall credit score.

A hard credit check is a thorough review typically conducted when you formally apply for credit. This type of check is recorded on your credit report and can impact your credit score, especially if many hard checks occur in a short period.

Soft checks are often used during pre-approval stages, while hard checks are carried out before final loan approval. 

Neither type of review typically occurs when you apply for no-credit-check instalment loans, although some will carry out a soft check.

How do no-credit-check installment loans and payday loans differ?

Installment and payday loans can provide access to funds, but they differ significantly in several ways.

Payday loans are typically for a small amount, usually no more than $1,000, and are designed to be repaid on your next payday. Installment loans can be for much larger amounts, and the payments are spread over several months.

Installment loans typically have lower interest rates compared to payday loans and are used for large purchases like a new car or debt consolidation. Payday loans should only be used for emergencies and repaid in one payment on your next payday.

Pros and cons of installment loans with no credit check

Pros

• Available to people with no credit history: The lack of a credit check means these loans are accessible to people who may struggle to borrow elsewhere.
• Predictable repayments: Fixed monthly installments make budgeting and planning your finances more manageable. 
• Flexible use of funds: Installment loans can be used for various reasons, including medical bills, debt consolidation and emergency costs.
• Quick approval: Installment loans with no credit check can be approved faster as extensive credit checks aren’t required.

Cons

• Higher interest rates: Interest rates for no credit check installment loans are usually higher to offset the increased risk to the lender.
• Fewer options: Not many lenders offer installment loans with no credit check, so your choices will be limited.
• Risk of unaffordable payments: Credit checks help assess your ability to afford a loan, so without one, you may agree to payments you’ll struggle to keep up with.
• Limited loan amounts: Some lenders that offer no-credit-check loans cap the maximum amount they are willing to lend to reduce risk.
• No credit-building opportunity: Since no-credit-check lenders don’t report to credit bureaus, your repayments won’t help boost your credit score.

Is an installment loan with no credit check a good idea?

No-credit-check installment loans can be a convenient way to borrow money and spread the cost if you have poor credit. However, it’s important you understand all of the costs and terms before applying.

Whether or not it is a good idea depends on your reasons for borrowing, current financial situation, and ability to make the payments. To help you decide, ask yourself the following questions:

• Do I really need to borrow the money?
• Can I afford the monthly repayments on top of my other commitments?
• Are there any alternative ways to borrow that may be cheaper?
• What happens if I miss a payment – are there penalties?
• Could this loan improve or damage my financial situation? 

Answering these questions honestly can help you make an informed decision.

Alternatives to no credit check installment loans

Before applying for a no-credit-check installment loan online, it’s worth assessing all of your options first. There may be another way to borrow with bad credit that is better suited to your financial situation. 

Here are several alternatives worth considering to help you make the right borrowing decision.

Credit builder loans

Credit builder loans are designed to help you establish or improve your credit history. Instead of receiving funds upfront, the loan amount is held in a savings account or certificate of deposit until you’ve completed the repayments. 

Once the loan is repaid, you get access to the funds, and your payments are reported to credit agencies, helping to improve your credit score.

This type of loan is ideal if you’re looking to build credit while saving money, but it may not be suitable if you need funds urgently.

Guarantor loans

A guarantor loan allows you to borrow money with the support of a trusted individual who agrees to repay the loan if you fail to do so. This lowers the lender’s risk and can help you get a loan if you have poor credit.

They are similar to co-signer loans; however, with a guarantor loan, the guarantor is only responsible for repaying the loan once the borrower has defaulted on their payments. 

Guarantor loans require trust and a strong relationship, as the guarantor’s credit could be affected if repayments are missed.

Secured loans

Secured loans require collateral, such as property or a car, to secure the loan. Because the lender has an asset to fall back on if you default, these loans can be easier to get if you have poor or no credit history.

However, the biggest risk is the potential loss of your collateral if you’re unable to keep up with repayments, so it’s crucial to ensure you can manage the loan responsibly.

Credit union loans 

If you’re a member of a credit union, you may be able to get a small loan with an interest rate capped at 18% APR.  and more manageable repayment terms than payday loans.

To qualify, you must be a member of a credit union. You can join a credit union if one exists in your area, you work in a certain industry or profession, or you are related to an existing member.

Personal line of credit

A personal line of credit can act as a flexible financial tool, providing access to funds up to a set limit. Unlike traditional loans, you typically only pay interest on the amount you use, making it a cost-effective option.

It can help you manage unpredictable or ongoing expenses and be a safety net during financial emergencies. If you have less-than-perfect credit, some lenders offer personal lines of credit as a viable alternative to payday loans, combining flexibility with potentially more manageable terms.

How to manage an installment loan

Managing an installment loan responsibly is vital to improving one’s credit score and avoiding a debt cycle.

The most important thing is ensuring you can keep up with the repayments. Repaying by ACH payments can help ensure you don’t miss a payment, but you need to make sure you have another cash in your bank to cover it.

Create a budget, factor in your payments, and adjust your spending as necessary. Try building up a small emergency fund to cover unexpected expenses, reducing the risk of missing payments. 

What to do if you can’t make a payment

Life can be unpredictable, and there may be times when you can’t meet your repayment obligations. If this happens:

• Contact your lender immediately: Many lenders offer hardship programs or alternative repayment plans to help borrowers in temporary financial distress.
• Explore options to adjust your payment schedule: You can request a payment deferral or an extension to give yourself breathing room.
• Avoid taking on additional debt: Relying on payday loans or other options to cover payments could worsen your financial situation.
• Seek professional advice: Speak with a financial advisor or debt charity to explore additional solutions.

Taking immediate action can minimise penalties, protect your credit score, and help you regain control of your finances.