Top 5 Reasons You Should Stay Away from No Credit Check Loans
When you’re struggling with debt, your borrowing options are brought to a minimum. Considering that many Australians are in this situation, many might be attracted to no credit check loans. Your application can be approved in a matter of minutes. The money can be transferred to you in less than 24 hours.
It might appear that there isn’t any easier way to get hold of money when you’re in need of cash. Still, borrowers should be aware of the risks implied to getting no credit check loans. Here are the main reasons that should incite you to rethink your decision.
If you think that the interest rates for credit cards are exaggerated, you have seen nothing yet. No credit check loans have high interest rates. Even though these types of loans are labelled as short-term only, in the long run, you end up paying an unbelievable amount of money on interest alone.
Bear in mind that when you sign up for a no credit check loan, you should be 100 percent sure that you meet the criteria: income, residency, employment, and other important factors.
Secondly, no credit check loans have a range of hidden fees as well. These costs add up on top of the loan capital and interest rates, which makes these financial services rather expensive. Before making any financial obligation, you should attentively read the fine print. This will ensure that you fully comprehend the terms you agree to.
Although all lenders have restrictions regarding the amount of money they can charge in fees, being informed is always the best. For instance, in the case of loans whose worth is less than $2,000, and they are repaid in one year, you cannot be charged more than a monthly fee of 4 percent and a 20 percent establishment fee.
Some Lenders might Approve Loans you cannot Afford to Pay
Since no credit check loans involve a high interest rate and hidden fees, many people who take out these loans cannot actually afford to make the repayments. Nevertheless, the market abounds with lenders and financial brokers that don’t take this factor into account. In other words, they offer these loans to individuals whose financial situation is precarious. That eventually leads to sinking deeper and deeper in debt.
It’s Not a Long Term Solution
Whilst no credit check loans are a quick and easy way to obtain cash, they are not a smart long term financial option. Think of it this way: how is borrowing more and more money helping you to minimise your debt?
To that, let’s add up the fact that the interest rates are astronomically high, not to mention the hidden fees that many borrowers aren’t acquainted with. If your financial situation isn’t the best, taking out a no credit check loan is likely to worsen it.
Your Debt is Likely to Grow Fast
If we were to consider all the costs involving a no credit check loan, you are likely to pay four to ten times the amount of money you initially borrowed. A tiny financial mistake could result into a lifetime of debt.
What is the Solution?
So, we established one thing, no credit check loans aren’t the best. Still, what can you do if you need financing and your credit rating prevents you from getting a more convenient deal? It’s up to you to carefully analyse your situation. Do you really need that loan or not? Perhaps taking out that loan isn’t a necessity. The safest way to stay away from these types of loans is by building credit as soon as possible.
Even though your rating is the worst, if you change your spending habits, and you aim at making timely repayments, you’ll eventually accomplish that. Also, if anything, you should check your credit for errors, since many credit reports contain fraudulent claims. Additionally, if you must borrow money, you should go to the right source. Stay away from unreliable brokers and choose wisely. For instance, NSW Mortgage Corp is one of those lenders you can depend on. Their team of professionals is eager to help Aussies struggling with debt.
Regrettably, although no credit check loans sound like the solution to your problems, you should take a close look at the aspects presented above. One thing is for sure: no credit check loans are easy to obtain, no one checks your credit rating, and you can get hold of cash in less than a day; however, in the long run, these loans cost a lot of money. So, make sure you analyse the bigger picture of this scenario!