iQuanti: When you need money in a pinch for a sudden home repair or family emergency, online loans can be a good option. But for those working to build better credit, you may be wondering if there are lenders who will offer loans to you. Even though it may seem difficult to find online loans with no credit check, don't worry. There are plenty of lenders online that have more lenient credit score requirements. Here's what you need to know.
How online loans for poor/fair credit work
Many people are used to lenders checking your credit score when assessing whether to lend you money. And while that's true in many situations, some lenders will also look at other factors when deciding whether to approve those with poor or fair credit.
Lenders may consider aspects of your financial life besides your credit score, like income, amount of outstanding debt, and how much money you spend each month. They may also use collateral, like your car's title, to secure the loan.
Lenders may also charge more fees or simply offer a lower-balance loan for those working to improve credit. That way, they will make more money in the lending process to cover the potential risk of extending the loan.
If you're ready to see what's available in the world of online loans, here are four options with lenient credit score requirements.
Installment loan
Installment loans, like personal loans, grant you access to a lump sum of money that you agree to pay back in monthly installments for the life of the loan. As you look at different options for installment loans, consider seeking pre-qualification with lenders.
The pre-qualification process allows you to see if you qualify for the loan without dinging your credit score. It's also smart to compare the APR (the loan's interest rate) and how much you'll pay each month during your repayment period.
Line of credit
A line of credit is a flexible loan with a predetermined borrowing limit. And while some lines of credit are secured by personal property, like a home equity line of credit (HELOC), others are available as personal lines of credit, which are not secured by collateral. One of the major benefits of a line of credit is that you can draw on funds whenever you need to cover an expense, then only pay interest on what you use.
For example, if you're working through a home renovation or planning a wedding, you may need to pay vendors over a period and not know how much it will cost in advance. You can tap the line of credit to get the funds you need when you need them, then work to pay it down after. But keep in mind that, often, lines of credit may have variable interest rates. That means they can change with the economy and increase or decrease during the time you're repaying the loan.
Title loan
Title loans require that you own a car and have its clean title in your name. A clean title simply means there are no liens or outstanding tickets associated with the car. During the application process for a title loan, you'll agree to let the lender hold onto your car title as collateral to secure the loan, but you can continue driving your car while you repay the loan.
Since the loan is secured by your car's title, there's less risk for the lender and you can get approved if you have poor or fair credit. But be cautious with this kind of loan and make sure you can make the payments on time. If not, the lender reserves the right to repossess your vehicle.
Cash advance
A cash advance is a short-term, small-dollar loan that can help you cover expenses before your next paycheck. These loans typically last two to four weeks, depending on when your payday is.
Cash advances are designed to provide a quick influx of cash to tide you over for a few weeks. Then, you'll repay this loan when you receive your next paycheck. As with other types of loans, be sure you can afford to pay the lender back on your upcoming payday. Failure to do so could mean some fees and interest charges.
The bottom line
If you need access to money but are working to improve your credit score, look for lenders and loans with more lenient credit score requirements. Online loans like installment loans, lines of credit, cash advances, and title loans may be a better option if your credit score is considered poor or fair. Be sure to compare lenders and loans to ensure you're getting a good interest rate and loan terms before you commit.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
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Original Source: 4 Online Loans With Lenient Credit Score Requirements
