Providers of short term loans are quite noteworthy for hardly ever requiring the borrower to submit to a credit check, but do you know why this is?
It’s absolutely commonplace to see payday loan providers touting the fact that their payday advance lending is available without having to go through a credit check. Moreover, it’s a simple fact that the majority of these no credit check payday loan providers will forego the requirement in an attempt to keep up with their rivals, who are all fighting tooth-and-nail for as much market share as they can possibly take, but when it’s ubiquitous when it comes to lenders boasting how borrowers don’t need to have their credit ratings scrutinised at the inception of a loan, they hardly ever spend enough time making sure these borrowers understand what the consequences are for leaving off the credit check.
It’s easy to get, but that doesn’t mean it’s affordable
Whenever you agree to a payday loan that does not require a credit check, your lender has an absolute dearth of personal details as to whether or not you are a poor credit risk and whether you’re going to be able to repay the loan on time and in full. With the lion’s share of lenders only requiring you to be gainfully employed and take home a minimum amount of cash from your employment, all too many borrowers take out payday loans even though they’re already struggling to repay the debt they have already accumulated – and adding on top of that isn’t going to help ease their financial burdens.
Lenders offset risk by making default on a payday loan incredibly punishing, often through massive annualised interest rates – sometimes upwards of 4,000 per cent. With no upwards payday loan interest rate cap, UK payday loan providers are not limited in any way, shape, or form from charging whatever they like to dissuade borrowers from defaulting, but they have also been accused of not publicising this very important fact well enough to prospective borrowers.
Failure to repay is a road to ruin
The ease of taking out payday lending is quite well known, but if you are going to encounter difficulties in repaying it completely, you are absolutely playing with fire. With massive late fees and compounding interest, your finances could be absolutely ruined if you need an additional month to repay the loan, and lenders will essentially double your interest every month until you clear your debt.
This makes it all but impossible for those earning less in income than most to repay such a loan, leading to unsustainable levels of debt incredibly quickly. Many lenders will even go so far as to triple the interest after a second missed month, making it a Herculean task to be free and clear of payday loan debt, so think long and hard before agreeing to that no credit check payday loan.