There is a widespread belief that those of us with really terrible credit scores will surely find it impossible to get a loan. But in fact, with the growth of the options available online from specialized lenders, it is possible to obtain some small personal loans without a credit check.

It may seem like a significant risk for lenders to make loans without checking the applicant’s credit history, and this is certainly true. As a result, there are some compromises that applicants must make if they want to get approved despite bad credit.

But, what are the special conditions that an application must accept when applying for this type of personal loan? And how can a lender approve with such confidence when they are clearly at significant risk?

No Credit Check – Reckless or Wise?

Any lender who accepts the risk of taking bad credit borrowers without hesitation has already clearly calculated the chances of making a profit from the deal. Remember, no lender enters a loan agreement with their eyes closed, making personal loans no credit check is a carefully considered strategic loan option.

The simple fact is that statistics consistently show that borrowers are more interested in rebuilding their credit reputation than taking the money and running. And in any case, a large percentage of today’s bad credit borrowers are honest borrowers who were victims of the economic meltdown four years ago. Therefore, getting approved despite having bad credit is not such a big risk.

Also, credit scores were never an important aspect of the approval process, so if any part of it is discarded to make a personal loan quicker to access, minimal risk is associated with the credit check.

Loan limitations

But lenders are not willing to grant a loan of $ 50,000 to someone who is not fully controlled. They have set clear limits on the size of the personal loan, with no credit checks being offered for small sums of just $ 100 to $ 1,500. What’s more, very high interest rates come to protect them even more from losses.

There is no mystery in these limits, as the lower loan limit ensures that maximum losses are kept low. This means that offering approval despite bad credit is really helpful for applicants who have to pay debts or specific emergency expenses. Maybe a hospital bill or a final notice about a late mortgage payment, for example.

For borrowers, the small loan does not help alleviate the pressure of repaying these personal loans when high interest rates (25%) are charged and the repayment term is as short as 14 days.

Payday loans and cash advances

The fact is, these loans are better known as payday loans or cash advance loans. This is because they are awarded against an impending paycheck and not on the basis of a long repayment period. Offering personal loans without a credit check means that approval is almost certain, just proof that the next check is large enough to cover the amount borrowed, plus interest.

Repayments are generally completed all at once, a policy that also protects the lender, as there are fewer opportunities for the borrower to fall behind or miss payments. What’s more, even though you offer approval despite bad credit, your chance of getting your money back is almost guaranteed.

Still, it is essential that the borrower budget for the deal, with a personal loan of $ 1,500 that requires $ 1,875 to repay, a very large sum to take from a paycheck.