Yes, a lender for most unsecured loans check credit. When you are looking to get a loan, your credit score and credit information may be one of the many requirements you may be asked to have before you could apply (and later approved) for a loan.
Whether it’s a home loan, car loan, personal loan, or even a business loan from places like a bank, credit union, or independent lenders, these types of loans are considered unsecured loans.
But what are unsecured loans, and why does a lender check credit before considering giving you a loan? We at Max Cash Title Loans will help you understand why a lender will check credit before giving a loan.
Why do they check credit?
These unsecured loans are very high-risk in the world of financials because they leave no collateral (like a house or car) to provide security for the lender. Thus, a lender only provides unsecured loans when they check credit from each of the potential borrowers that apply. This means that they may perform a credit check several times during the entire process.
In fact, many mortgage lenders for homes do a final credit check to ensure that they can trust you in having the ability to pay for the mortgage. But they are not the only ones, as many lenders that offer unsecured loans make it their policies to check credit before giving the loan to you.
Here are some types of unsecured loans that you probably have had or considered before, especially since they do tend to require a lender to perform a credit check:
Payday Loan
Payday loans have become popular over the years for its fast processing and funding. This type of unsecured loan is a loan from a non-financial business where borrowers can get money to cover expenses before having to pay off the loan by your next paycheck, hence why it’s called a payday loan. Although they may seem convenient, they also have high transaction fees and interest rates. Some even charge as much as 400% for interest.
Signature Loans
Signature loans got their name because the only thing securing the loan is your own signature. This loan needs you to promise that you’ll repay the person or business that is lending you the money. Signature loans are typically repaid through set monthly payments. Signature loans usually have a lower interest rate than many other forms of unsecured loans, but there is a chance of high rates due to the high risk that these loans pose to a lender.
Student Loans
Depending on the organization you are borrowing through, the interest rates, repayment plans, and grace periods vary greatly for student loans. On the other hand, many student loans don’t require previous credit history for the borrower, as some students may not have a big credit history to start with. But of course, this loan is completely dependent on whether you are using it to go to school. Any other uses for student loans is unfortunately invalid if you need to pay off other expenses that are not school-related.
Peer to Peer Loans
Peer to peer loans are an unsecure way of borrowing money as the borrower and lender must have that secure reliability by individual people, which means a lot of information digging and a credit check. Websites like Prosper let borrowers post a loan request where potential lenders can choose to offer them the money. Like other unsecured loans, peer to peer loans tend to come with a high interest rate.
With all these loans that check credit, is there a loan that does not or not follow with a credit check? Yes, and they are known as secured loans. Secured loans don’t require a credit check, because if you “secure” the loan with collateral, it gives you the opportunity to get you the loan without expecting the “trust in repayment” to come from your credit score.
Now that you have an idea of what loan you could get without the need for a credit check from a lender, let’s look at one of the most well-known secured loans that we at Max Cash Title Loans are knowledgeable about:
Title Loans
With title loans, there is a chance that they could deliver fast funding and efficient funding with a minimum set of requirements. These include:
• A clean and free car title.
• Proof of income.
• Proof of residence.
And as a secured loan, your credit score is not factored into the application process because the title of your car is used to secure the loan. So, don’t expect any kind of credit check from your car title loan lender!
But before you jump the gun and find title loans that could be right for you, you should consider the things you might have to look for in a car title loan. This includes:
• Do they have hidden fees?
• What are their rates?
• What are their payment options?
With all the work that must go in researching for the best possible car title loan, why not just get help? That’s why we at Max Cash Title Loans offer helping you make the search a little easier.
Max Cash Title Loans Can Find You Lenders that Don’t Check Credit
Max Cash Title Loans is a title loan broker with years of experience on title loans. We could help you find some possible choices of title loans from multiple connections we have made with lenders throughout the country.
We understand the hassle that comes with lenders who credit check you before offering a loan that you may not be satisfied with. That’s why we recommend title loans that don’t perform a credit check, and don’t decline potential borrowers due to bad credit.
Apply through our online application or call us today to see if we are the broker that can help you find a good title loan today.