There are lots of different loans available for us to use and there are big differences between them. Sometimes it can be difficult to know which loan to choose because there is a confusing mix of different types. It is important to understand the differences between them so that you can make the right decision. You need to think about all sorts of factors to make sure that you match the loan that you choose with the requirements that you have. To start with it is good to know the difference between no credit check loans and other loans and then you will be on your way to making the right choice for you.
What are no credit check loans?
A no credit check loan is rather poorly named. A credit check does take place, but the lenders will be prepared to lend to those who have a poor credit record. They will be looking for anyone who is over the age of 18, has a regular income and lives in the UK. They will check to make sure that those criteria are fulfilled. They will not look to see what the credit record is like though as they are prepared to lend to those that have a poor credit score. This is because these loans were set up specifically to help those that have a poor credit score to be able to borrow. It was noticed that there was a gap in the market, where those with a poor credit score were just not able to borrow and these lenders decided that they wanted to rectify that situation.
What types of no credit check loans are there?
There is an expanding number of different types of no credit check loans. They differ slightly, but they all are available to those with a poor credit record, although anyone can apply even if they have a good credit record. The most well-known is probably the payday loan, which lends you a lump sum of money which has to be repaid in full when you next get paid. This is designed to help out in an emergency when you have run out of money and cannot wait until you are next paid to get the money. The loan is repaid really quickly so people like it because they are not in debt for long. If they find paying back in one go is too difficult, an instalment loan can be better. This will allow repayment to be spread across a series of months rather than just in one lump sum which can make it easier to manage the repayments. Both of these loans only lend relatively small amounts of money though and if you want more money then you could look at a guarantor loan. These do offer significantly more money which you repay in instalments but you will need to find a person with a good credit record that will act as a guarantor for you and make any repayments that you are not able to. If you have a vehicle you could use a log book loan, which will allow you to borrow money against the vehicle but if you miss repayments the vehicle will be repossessed so this is a risk that you will have to consider very carefully.
How do they compare to conventional loans?
Conventional loans tend to have the option of lending you more money. A mortgage, student loan or personal loans could lend more then tens of thousands of pounds which is an amount that you will never be able to borrow with a no credit check loan. You will also find that conventional lenders might tend to be more well-known than no credit check lenders. This is partly because no credit check loans are reasonably new and therefore, they have not had the time to get well-known. Also, they tend to be smaller companies and may not have the budget to advertise. They also tend not to have high street branches. The loans themselves tend to be faster to arrange than conventional ones, available to those with a poor credit record and for smaller, more manageable amounts of money.
If you do have a poor credit score then these loans could be really useful for you as you will have no alternative options. However, they are also available to anyone who has a decent credit record as well. It could be worth thinking about whether the speed of organising the loan or the fact that you can borrow smaller amounts of money might be more appealing than a conventional loan anyway. It is good to make sure that you look at all of your options because then you will have the very best chance of finding a loan that works really well for you.