Last updated on July 15th, 2021 at 01:08 pm
Yes, you can get a loan without a bank account. The main difference between getting a loan with a bank account or without one is the type of loan available.
Getting a personal loan requires the borrower to have an account with an established bank or financial institution.
Once the loan is approved, the funds are deposited into the bank account.
A checking account is the most preferred by banks, especially as a financial history source. The lender can determine whether you are in a good position to pay back the loan.
More conditions are put in place for loan processing without a bank account. These terms protect the lender due to higher risk. With a bank account, it is easier to get an unsecured loan.
However, without a bank account, secured loan options are the most available.
The following loan options are available when you do not have a bank account: –
1. Auto Title Loans
Using your vehicle as security, you may qualify for an auto title loan. Your vehicle, which should be registered in your name, will be appraised to get this loan. The appraisal determines the value of the vehicle.
The loan that you receive will be a percentage of that value, normally between 25% and 50%, with an APR being approximately 200%.
If you cannot make the payments on the loan, then the vehicle will be repossessed.
However, in the interim, you can still use your vehicle. Selling the vehicle is how the lender can recover the outstanding loan funds in case of default. The advantage of this type of loan is fast processing.
With the right documentation, the funds from the loan are accessible within a day or two.
2. Guarantor Loans
With guarantor loans, rather than offering collateral or an asset to the bank for security, someone guarantees the loan. This means that they take responsibility for repaying the loan if you default. The bank normally requires guarantors to be people who are close to you.
For example, they may include a family member or friend, or even an employer.
For the lender, this creates security from default as there is a way to recover funds when necessary. Guarantor loans have interest rates that are higher than personal loans.
The terms and conditions are more favorable than other short-term loans, such as payday loans.
With a strong guarantor, it is possible to access significant funds and get a longer repayment period.
3. Payday Loans
The Payday Loan is a good option when all the odds are against the borrower. It is ideal for anyone who may have bad credit or is not eligible for a typical bank loan.
Although a convenient option, it is a high-cost loan. This loan acts as a cash advance against your earnings.
Normally, payday loans need to be repaid within two weeks to a month. The typical APR for these loans is between 200% and 700%. Processing is quick, taking approximately one day.
The payday loan does not require collateral or an asset. The security comes from the paycheck.
The borrower needs to make their payments on time and in full. The cost of rolling over this loan is incredibly high.
4. Pawn Loans
Away from financial institutions, you can choose to get a loan against one of your high-value personal items. With the pawn loan, you borrow funds against the resale value of your item. Pawnbrokers will typically give you between 25 – 60% of the value.
When you pay back the full amount of the loan, your items are returned to you.
To ensure that you get the right value, an appraisal of the item should be done.
The interest rate of this type of loan is typically lower than for a payday loan.
There is no fixed rate, and it is usually at the discretion of the pawnbroker.
Repayment of the loan should be made within several months.
5. Online Lending Platforms
You may not necessarily need to go to a bank to get a loan. Instead, you can choose to get a loan from an online lending platform.
These loans have the benefit of being unsecured though it is the lenders that set the terms for the loans.
The challenge of taking these loans includes conditions that are not always fair, strict terms, and high-interest rates.
Before choosing to take out a loan without having a bank account, remember the following: –
- All these loan options will have higher interest rates and fees. Ensure that you have a solid plan in place for making the payments on time.
- When you cannot make a repayment on guarantor loans, the responsibility will fall on your guarantor. They could be requested to pay the loan back in full, regardless of their financial situation.
- You will typically gain access to short-term loans. These are loans that require repayment within a year.
Taking a loan when you do not have a bank account is a viable option if your credit history is poor or you have a low income. Despite the interest rates being higher than with a personal loan, in comparison to payday loans, the rates are better.