It can be tricky when you are applying for a loan, whether that be a payday loan, installment loan or any other type of short term loan without a bank account.
Lenders will need to pay any loan amount you are approved for into a nominated checking or bank account. The chosen account will also be the account where your monthly or lump sum repayments for the loan are taken out of, so having no bank account may well limit your options when you need to borrow money online or in store for any purpose.
Nevertheless, there are circumstances in which you can get a loan without a bank account when you need to borrow money, but it can make the process slightly more difficult. This is because having a bank account is one of the most common requirements when you apply for a short term loan or any other personal loan in the USA.
However, if you do not have a bank account this does not necessarily rule out your loan options and does not always mean you can’t get the loan you need in a financial emergency. Read on to find out how you could get a personal loan without a bank account.
Why Do Lenders Prefer Borrowers With a Bank Account?
Lenders use applicant’s previous bank statements to check that they have regular income (usually of at least $800 per month). Many lenders also carry out an in-depth credit check before approval. This is to accurately assess a borrower’s eligibility for the loan and the likelihood of them repaying it full on time.
A bank account also allows lenders to easily deposit the loan into your nominated account, either through direct debit or a standing order. A bank account will also ensure that there’s a record of how many installments you’ve received. For ease and efficiency, lenders will also tend to prefer setting a repayment schedule with borrowers to ensure it is more likely that repayments can be made in a timely manner, helping borrowers avoid falling into bad credit.
Nevertheless, some lenders like payday or title lenders, may consider applicants without bank accounts. However, in such instances lenders may require borrowers to provide some form of collateral in case the money is not repaid. They may, for example, suggest borrowers take out a title loan (where your car title is secured against the money) or even a secured loan against your property. If the money is not repaid, then assets will be repossessed by lenders.
If you apply for a payday loan with no bank account, you should be very wary of companies offering guaranteed approval with no credit checks. Many of these companies are more likely to be unregulated and possibly illegal (read more about loan sharks here).
Finding a Loan With No Bank Account
Financial emergencies happen to most people at some point in their lives and it can be incredibly stressful. Whether it’s a car repair, or a sudden healthcare cost or a large medical bill, financial emergencies are inevitable yet unpredictable. There are, however, many options when it comes to borrowing money to help you get back on your feet.
But, what are your options for finding a loan without a bank account? As with any other loan, your options will vary depending on factors such as your income, credit history as well as whether or not you have bad or very bad credit. Whether it’s credit cards, authorized overdrafts, unsecured loans or simply payday loans, there are many companies and lenders in the USA that may be able to help you get the money you need.
Common options for those without bank accounts are title loans or secured personal loan options. A title loan, also known as a ‘car title loan’, is a type of short term secured loan where borrowers use their vehicles as collateral. The borrower surrenders the hard copy of their vehicle title in exchange for the loan amount, which can be as little as a $100 loan.
Such loans can typically be acquired very quickly. However, despite the secured nature of such loans, they still tend to carry comparatively high interest rates. These loans are attractive as, although they verify the borrower’s collateral and income, they may not check your credit score so are popular choices for those with bad banking history.
What About Payday Loans and Cash Advance Loans?
It is possible to take out a payday or cash advance loan with no bank account. However, this can negatively impact your financial health in the long-term and you may find it more difficult to find a lender willing to lend you money without a bank account.
The majority of banks and lenders in the USA will require you to have a bank account or debit card before approving your application. This is in order to assess the affordability of the loan by looking at your spending habits. Also, having a bank account allows lenders to set up a continuous payment authority, whereby they will be able to automatically take the required repayments from your account after your payday each month.
Nevertheless, payday loans and cash advance loans are still available options for people with no bank accounts. Payday loans and cash advance loans are short term loans which provide borrowers fast funding and come with easy applications. Whether you need a $500 loan or need to borrow $5,000, it is still possible.
A payday loan is generally a short-term loan for a small amount, typically helping people who need to borrow $500 or less. The repayment of this loan including fees is usually due on your next payday. Payday lenders will typically require you to have an active checking account which they will provide the funds to and from where you will make your loan repayments.
These short-term loans include very high interest rates. They may also require you to provide a pay stub when applying for one so the lender can verify your income. Lenders will usually require you to show proof of at least $800 per month from employment or another source of income.
Therefore, although neither title loans nor payday loans necessarily always require a bank account, having a job and steady source of income is always important when applying for a loan.
How Can I Get a Payday Loan With No Bank Account?
Getting a payday loan without a bank account often involves a local representative making visits to your home to consider your application and deliver funds if you’re approved. This representative will be the main point of contact. These types of loans are often referred to as ‘doorstep loans.’
Because payday loans are typically taken out by individuals who are unable to opt for traditional lending due to a poor credit history or lack of a bank account, payday loans often carry high interest rates and large penalty fees for missed payments.
For this reason, a payday loan may end up being more expensive than other forms of lending. A payday loan should only be used for a small amount of money in the short-term.
Can You Get a Payday Loan With a Prepaid Card?
It is possible to get a payday loan or cash advance loan with a prepaid debit card. However, this is not offered by all lenders and may cost you more in interest and loan fees. A prepaid card will simply work by being charged with a prepaid amount which can be used in a similar way to a normal debit card.
Your lender will provide you with a PIN number to use for when you do need to use the card and credit facility.
What State Regulations Are in Place For Borrowing Money?
Before considering if you should take out any loan, with a bank account or without and secured or unsecured, whether you have an active bank account or not, you should check your state regulations surrounding payday lending and short term loans. Some states prohibit payday loans altogether, whilst in other states, there are different rules in taking out such a loan. In states such as Arizona, Arkansas, Connecticut, Georgia, New Jersey, New York, North Carolina, Pennsylvania and Vermont, payday loans are not legal, whereas in states like Illinois, Florida and Texas, payday lending is legal.
Therefore, if you live in one of the states where payday lending is not legalized, your options will be more limited when it comes to taking out a loan with no bank account.
What Are The Alternatives to Payday Loans If I Have No Bank Account?
If you don’t have a bank account to utilize for your payday loan and to which a lender can deposit the funds you borrow, there are some alternatives to payday loans to consider. If you don’t have a checking account, you may opt for:
- Cash loans
- Credit card advances
- Bad credit loans
- Credit unions
- Credit builder loans
- Borrowing money from family and friends
It is much harder to get a loan and borrow money without a bank account. Although there are options for loans for people without a bank account, they are often more expensive and harder to be approved for. Higher interests usually apply and charges for late or missed repayments may be higher, reflecting the risk of the borrower.
If this doesn’t sound right for you, then you could always consider:
- Asking friends and family to lend you the money you need
- Speaking to your employer to get a salary advance
- Utilizing the available credit on a credit card
- Using any savings you have built up
Besides borrowing from a family member or friend, there are alternative loan options that you can also look at. You should also think about where you can save money before you decide to apply for any short term loan or personal loan. Sometimes, you may be able to save enough money, for example, by reducing how much you spend on luxury items, to avoid borrowing money altogether.
Are Loans Without a Bank Account a Good Idea?
If you’re considering getting a loan without a bank account, then you should also consider the advantages and potential drawbacks to doing so. When considering borrowing money, you should always check before applying whether you can afford to borrow and then repay the loan alongside accrued interest.
Below, we have compiled a list of advantages and disadvantages to borrowing loans without a bank account.
Advantages to Borrowing Loans Without a Bank Account
- Tailored loans are available for those without bank accounts
- Your credit score and banking history will not be looked at
- You can still get funding during a financial emergency
- You can get the amount of money you need to pay for unexpected, temporary expenses
- Your application by certain lenders will still be considered despite your financial past
Disadvantages to Borrowing Loans With No Bank Account
- Loan options are more limited
- Many loans require borrowers to pledge assets which put them at risk of repossession if money is not repaid
- Borrowers are more likely to fall into “debt trap” – where they cannot repay the loan, fees or interest, and fall into repeat delayed repayments
- Borrowers unable to repay may end up having to refinance debt
Alternatively, if you are worried about the consequences of alternate loans, you may want to consider setting up a bank account. The process of opening a bank account can be quite simple, and even if you’ve had past checking account errors or misuse, you can look for a second chance checking account.
These generally require a minimum deposit of $25 and are specially designed to help people who have negative banking history get their foot back in the banking door. Besides the deposit, you also need to be debt-free elsewhere to obtain a second chance checking account.