Personal Loans With No Credit Check

A loan is a certain amount of money borrowed by an individual from a bank or financial institution. Usually, loans are given to individuals only after assessing and checking the past credit history, CIBIL score and the repayment capability of the individual. However, there are some loans called the ‘No Credit Check Loans’ which are issued without checking the credit score or the credit history of the individual. This is the best option for individuals who have a bad credit history or a low CIBIL score or are unsure of their credit history. These loans are granted after confirmation of a source of income by the lender. In this blog we will cover no credit loans in depth.

Are There Any Loans With No Credit Check That Banks In India Offer?

In India, the banks and financial institutions do not offer ‘No Credit Check’ loans, but instead they offer ‘Secured loans’. They are loans which are given by pledging assets as collateral by the borrower. This is beneficial for both the borrower and lender because the borrower can avail secured loans even with a bad credit history and score and this is an opportunity to improve their credit score with flexible interest rates and tenure periods. The lender gains possession of the asset in the circumstance of the borrower not being able to repay the loan amount. The lender can then sell the asset in the market to recover the loan amount.

Some of the secured loans offered in India are

1. Car Loan
2. Home Loan
3. Business Loan
4. Mortgage Loan
5. Education Loan
6. Loan against fixed deposit
7. Loan against credit card balance

Benefits and Features of Personal Loans With No Credit Checks

‘No Credit Check’ loans come bearing with them a range of features and benefits.

The features of no credit check loans are

1. The loan is granted without checking credit history or to people with a bad credit history or low CIBIL score.
2. The rate of interest is higher when compared to other types of loans.
3. The time taken to approve the loan is much quicker when compared to other types of loans.
4. The loan is available for higher loan amounts.
5. The tenure periods are flexible.

Benefits of ‘No Credit Check’ Loans

1. There is no requirement of a high credit score in order to avail the loan.
2. There is no checking of the credit history to grant a loan.
3. There is less documentation and paperwork involved in the process.
4. The time taken to approve the loan is much quicker.
5. There is no need for a third party guarantee.
6. Different types of loans are available to cater to different requirements.
7. There is no risk of possession of an asset because there is no need for collateral.
8. Heftier loan amounts are granted.
9. The tenure periods are flexible and hence more convenient to repay for the borrower.
10. Higher probability of the loan being approved and this helps in improving the credit score of an individual.

Eligibility Criteria and documents required for different types of loans

Eligibility Criteria to Avail Secured Loans in India

1. There is no requirement of a high credit score in order to avail the loan.
2. There is no checking of the credit history to grant a loan.
3. There is less documentation and paperwork involved in the process.
4. The time taken to approve the loan is much quicker.
5. There is no need for a third party guarantee.
6. Different types of loans are available to cater to different requirements.
7. There is no risk of possession of an asset because there is no need for collateral.
8. Heftier loan amounts are granted.
9. The tenure periods are flexible and hence more convenient to repay for the borrower.
10. Higher probability of the loan being approved and this helps in improving the credit score of an individual.

The documents required are different for different types of loans.

Documents required for Mortgage Loan

1. There is no requirement of a high credit score in order to avail the loan.
2. There is no checking of the credit history to grant a loan.
3. There is less documentation and paperwork involved in the process.
4. The time taken to approve the loan is much quicker.
5. There is no need for a third party guarantee.
6. Different types of loans are available to cater to different requirements.
7. There is no risk of possession of an asset because there is no need for collateral.
8. Heftier loan amounts are granted.
9. The tenure periods are flexible and hence more convenient to repay for the borrower.
10. Higher probability of the loan being approved and this helps in improving the credit score of an individual.

Documents Required For Car Loan

1. There is no requirement of a high credit score in order to avail the loan.
2. There is no checking of the credit history to grant a loan.
3. There is less documentation and paperwork involved in the process.
4. The time taken to approve the loan is much quicker.
5. There is no need for a third party guarantee.
6. Different types of loans are available to cater to different requirements.
7. There is no risk of possession of an asset because there is no need for collateral.
8. Heftier loan amounts are granted.
9. The tenure periods are flexible and hence more convenient to repay for the borrower.
10. Higher probability of the loan being approved and this helps in improving the credit score of an individual.

Documents Required For Home Loan

1. Proof of residence such as electricity or telephone bill, latest bank account statements, etc.
2. Proof of income such as the latest 3 months salary slip or form 16 with salary certificate.
3. Latest 6 months bank account statement.
4. Guarantor form is optional.

Documents Required For Business Loan

1. Promoter profile. Promoter is the person who has started the company.
2. Company profile with an existing product range.
3. Audited balance sheets for the latest 3 years.

Disadvantages of No Credit Check Loans

Apart from the many features and benefits ‘No Credit Check’ loans have to offer, there are a few disadvantages too. They are as follows

1. Unfavourable loan terms which are usually set by the lender in his favour because there is no pledging of assets or collateral in no credit check loans.
2. Higher interest rates which are higher than the credit check loans.
3. Short term loans – the tenure periods are varied and flexible but are still short when compared to credit check loans.

Factors That Affect Your Loan Approval

There are a few factors that affect the approval of no credit check loans, they are as follows

1. Job stability: Individuals who have stable jobs or are working in reputed companies have a better chance of availing loans. Some banks even require the applicant to work in the same job for at least a year before applying for the loan.
2. Age: Individuals of younger age groups are considered more prone to change jobs quickly and more often, hence affecting their job stability.
3. Listed Companies: Some companies are listed by the banks as repeated employers who are trusted to pay their employees on time. So individuals working in such listed companies have better chances of availing loans.
4. Prepayment: Payment of the loan amount before the due date, i.e, early payment of the loan positively affects the availing of a loan because this gives an impression of the individual being serious about the repayment of the loan amount.
5. Repayment History: A good repayment history with timely payments improves the credit score of an individual and hence increases the chances of availing a loan.

Solutions to Avail Loan With Low Credit Score

There are a few ways by which an individual can avail a loan even with a low credit score. They are as follows

1. Improving credit score: the higher the credit score, the higher are the chances to get a loan approved. A few ways in which one can improve their credit score are – choosing a longer tenor for loans, making repayments on time, not applying for loans with multiple financial institutions, rectifying mistakes in credit report, maintaining a low credit utilisation ratio and lengthening credit history.
2. Seek alternate lenders: Seek lenders who require only basic eligibility criteria to grant a loan.
3. Apply with a co-applicant: This reduces the risk of repayment default and increases the chances of loan approval because the cumulative income increases. Opt for a lower loan amount because higher loan loan amounts with a low credit score do not go hand in hand.
4. Show sufficient income: This instils the confidence in the lender regarding your capability of paying back the loan amount.

FAQs

1. Can I get a loan with no credit check? 

   Yes, in India they are called secured loans which require collateral to be pledged. Some examples of secured loans are education loan, business loan, car loan, home loan, etc.

2. Where can I get a loan with no credit check? 

   There are many online lending networks which provide this service, for example, MoneyMutual, CashUSA.com, CreditLoan.com, BadCreditLoans.com, BillsHappen, CashAdvance.com, etc.

3. What is credit history? 

   Credit history is the financial history of the individual such as the loans taken, the repayments done, the outstanding balances, the credit score, etc. This is considered by the lenders while granting loans.

4. How can I get business loans with no credit check? 

   Contacting small finance banks (SFBs), microfinance banks (MFBs), non-banking financial companies (NBFCs), getting an overdraft facility from your bank, applying for secured loans from leading banks and assistance from peer-to-peer lending are a few ways by which a business loan can be availed without a credit check.

5. Are there any car loans in India with no credit check? 

   Yes, both cooperative banks and private lenders offer such loans. However, they come with really high interest rates when compared to other types of loans.