A bank account plays an essential role when you’re applying for a personal loan. Most lenders make it part of their application requirements because it gives them a preview of your financial situation. The notion is that the more deposits you have in your bank account, the more likely you can repay the loan.
Remember that your loan isn’t free money, and lenders have to make sure that you’re financially capable of paying them back. However, if you don’t have a bank account, you are not alone. Many people were in the same dilemma, yet it didn’t hinder them from getting approved for financing.
Although not having a bank account for whatever reason doesn’t necessarily mean you won’t get a loan, it might be more challenging. Thus, we’re highlighting below some essential things you need to know before taking out a personal loan with no bank account.
Limited Options
One of the things that lenders may look at is your net worth. It’s generally your assets minus your liabilities. Since a checking or savings account will serve as one of your assets, lenders are likely more reassured when you have a bank account. But if you don’t, they might limit the amount of your loan.
Bear in mind that the loan you’re applying for will become a liability. Typically, lenders won’t lend you an amount that they know is beyond your net worth. Besides that, you might have a lesser chance of getting approved for an unsecured loan if you don’t have a bank account. Because lenders tend to worry more about getting paid back, you might have limited options.
Additional Requirements
Though a bank account is only one factor that lenders may look into, it can have a bearing on their decision-making. Your bank statements can tell how responsible you are with your personal finances. Thus, they might require additional requirements to make up for your lack of access to a bank account.
Lenders would usually ask for more details and documents to verify your income and your capacity to pay back the loans you’re applying for. Having no bank account means that they know less about you. To compensate for that risk, they may require you to put up collateral for your loan. This way, they can retake something of value if you fail to repay them.
High-Interest Rates and Short Repayment Terms
Apart from collateral, lenders might charge higher interest rates and fees if you don’t have a bank account. It is again because they might view you as a credit risk. Note that you won’t also possibly get a longer-term since your loan amount will likely be limited.
With that, the expensive rates and short repayment terms might make it harder for you to pay off the loan. Thus, before you take out a personal loan with no bank account, think about whether or not you can keep up with these possible higher rates and short repayment terms.
Best Sources To Get A Loan With No Bank Account
As you can see, getting a loan with no bank account has some downsides and challenges that you need to prepare for. However, you can keep them down by looking at the best sources. It is essential to find the right lender when you take out a personal loan, whether or not you have a bank account.
Credit Unions
A cash deposit is still one of the eligibility criteria when you apply for a loan in credit unions. But the good thing is they won’t solely rely on your bank account when reviewing your entire financial situation. More than that, their maximum interest rates are usually lower than most traditional banks. And since credit unions are not all alike, the key is to find the one that will best suit your qualifications.
Online Lenders
Online lenders are also one of the best sources if you want to get a loan without a bank account. They are more lenient in their qualifications for as long as you can prove your income. Another advantage when working with online lenders is their easy and fast application process. If you need quick money without stressing about having a bank account, they are an excellent option.
Peer-To-Peer-Lending
You can also opt to borrow from peer-to-peer lending sites. These sites are online platforms where you’ll be matched with a lender that will allow you to borrow the amount of money based on your qualifications. Although most peer-to-peer lending requires a verifiable bank account, you can find some who don’t. The benefit of working on this option is that you can get approved regardless of your credit history.
Takeaway
Getting a loan without a bank account requires some diligence and careful planning. Just because you need the money doesn’t mean you have to rush on committing to any lender. If you want more options, it’s never too late to open a bank account. Nevertheless, when taking out a loan with or without a bank account requirement, always think about how you’re going to repay it.
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