Ideally, a loan is provided to a borrower after a complete screening of their credit score on the part of the lender is performed. This is done in order to be able to accurately assess the risk of non-repayment attached with a particular borrower. However, there are some lenders who are willing to grant a loan to a borrower without taking a look at their credit-behaviour. Such a form of lending option is known as a No Credit Check Loan. This article will take you through that very concept and touch upon how you can apply for a No Credit Check Loan. Read on to know more.
No Credit Check Loans, as the name itself implies, is best for those individuals that have a substandard credit history and/or a low CIBIL score. When it comes to sanctioning No Credit Check Loans, the lender can do the same without pulling up the borrower’s CIBIL report. However, given the overall risk profile of the borrower, which usually increases with a low credit score or lack thereof, they are usually charged a higher rate of interest as compared to in the case of an individual that has a credit score which is deemed to be ideal by lenders. In most cases, the only document that a borrower will have to furnish is a proof of income, which will help the lender determine his ability to repay the No Credit Check Loan. Such a kind of loan is also said to be one of the best options for those individuals who are unsure about their credit history.
No Credit Check Loans, much like any other forms of lending availed through financial institutions, have their own distinct features as well. What you will find below is a list of those features along with what are the implicit benefits of taking up a No Credit Check Loan. Read on for more.
Such a loan is sanctioned irrespective of the borrower’s previously-exhibited credit behaviour.
The time taken to approve such a loan is generally shorter.
Borrowers of a No Credit Check Loan pay a higher interest rate.
The borrower of a No Credit Check Loan can choose to repay it over a time period as long as 20 years.
Higher loan amounts can also be availed if a borrower goes for a No Credit Check Loan.
What you will now find below is a list of some of the benefits that a borrower of a No Credit Check Loan can avail, most of which is attributable to its very own nature. Let us take a look at the same right away.
A No Credit Check Loan is passed with less documentation and paperwork
No need for keeping any of your prized possessions such as your house or jewelry as collateral
Since there is no need for a collateral, the institution cannot take possession of any assets
The interest rates tend to stay stationary
A No Credit Check Loan surely comes with its own set of positives, but it does not mean that there are no drawbacks of the same. Such disadvantages are also something that one must make a note of. You will find a list of the same below.
Interest rates are higher - As mentioned before, no credit check translates to a higher risk profile in the mind of a borrower, who then consequently charges the borrower a higher interest rate.
Relatively shorter loan repayment tenures - Depending upon the lender, it is entirely possible that the borrower will be required to repay their dues over a shorter span of time, as the lender may have chosen to give them a shorter loan repayment tenure due to the fear of the borrower defaulting.
As of now, banks and other financial institutions alike that operate in India do not offer No Credit Check Loans to borrowers. However, some of the institutions have no qualms over sanctioning the same even though the borrower has a bad credit score.It is said that Secured form of loans are the best alternatives No Credit Check Loans in India. Such a form of lending not only makes it possible for people who do not have a strong credit history, but the same also facilitates the construction of a good credit score and history. Currently, all Indian banks and financial institutions provide secured loans.
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