Apparently, these two loans are the same, considering the “no credit verification aspect.” You have a chance to get approved for loans regardless of your poor or no credit history status. Does that mean that they are the same and have no differences at all?
No, they have some similar characteristics but are not the same financing option. They have features which do not resemble each other at all. Besides, lenders have different perspectives while offering these loans.
Bad credit funding solution allows you to apply for a loan despite low scores. Thus, if you are cash-strapped and struggling with poor credit, opt for them, provided no other option is left for you. For that matter, you can get very bad credit loans from direct lenders in the UK with no credit check.
Since there is no necessity to reveal your credit scores, a very low credit history seems to face no obstruction as well. However, borrowing is not going to be easy as nothing remains hidden from the loan provider. They will enquire about a solid assurance like a guarantor or assets to compensate for the risk of lending.
Although it might seem as if you are getting a no credit check loan, some factors can make disparities quite evident. Look for them by reading through this blog.
How does a lender perceive no credit check and bad credit loans?
These two loans are alternative options to each other. You might be opting for them in slightly different scenarios. Both of them celebrate the ‘no credit check’ feature.
This relieves you from the pain of feeling stuck because of poor credit scores. However, the lending viewpoint would be diverse for these loans as one is specifically meant for poor credit borrowers. On the other hand, no credit check loans are more of a payday funding option.
Draw a comparison between the two right here.
The income angle
No credit check financing options are mainly income-based loans. The lender would need you to present solid proof of your earnings. Thus, if you are salaried and have a paycheck to receive soon, these loans are indeed a good opportunity for you.
They are usually short-term in nature, and thus, you should clear the payments once you receive your salary. Since these loans are given out based on your stable earning status, the significance of credit checks subsides.
This does not mean the lender will not assess any of the borrower’s factors. For a bad credit loan, there is some flexibility as the loan provider will be willing to accept any form of income. Thus, you can earn from a part-time job as well to go ahead and apply for these loans.
Therefore, both of them will require you to establish an income source. This will serve the purpose of repayment assurance.
Assessments that matter
An affordability check which is ideally a soft analysis of your income ability is mandatory for both these loans. Clearly, a hard check that can reveal your credit scores are no longer a part of the lending process.
However, it should not be seen an easy opportunity as other checks like verification of your affordability will be a matter of concern for the lender. They will feel content about your loan application if they are certain that repayment will happen smoothly.
These two funding solutions will require this soft checks. However, they are not going to leave any imprint on the credit profile of the borrower. This means opting for them will not result in further blemishing of the credit history.
What are the basic features of these loans?
While comparing some of the pointers where some disparity happens, it makes sense to shed some light on areas that commonly influence both. These could be the inherent characteristics that define these loans.
· Cost of borrowing
No matter which option you choose, you cannot skip this part. When you agree to accept a loan amount, you agree to pay the interest rates as well. You have to repay the loan amount along with interest rates.
Now, with the no credit check funding option, you will have your income to back it up. This means the lender might see less risk in offering these loans to you. Assessing the other factors, they might consider charging an affordable loan rate.
Thus, you do not have to go out of the way to manage the cost. On the flip side, a bad credit funding solution is also offered based on affordability. A smaller amount will be issued, which might not attract a heavy price provided you have applied with new direct lenders in the UK.
· Repayment is not going to be a hassle
You cannot have these loans for a longer duration that can expand over a few years. They are short-term loans, and you should repay them accordingly. However, the lender will not pressurise you to pay back the entire amount at once.
They understand that this might not be practically possible for you. For this reason, they allow you to portion out the amount in small parts that will be easy for you to pay back over months. The burden will spread over months and you should be able to produce the needed amount for monthly payments.
· Virtual application accepted
Lenders have modernised the application procedure by introducing online forms. This process is quite streamlined and saves a lot of your time. When you are in a rush to arrange cash for an emergency, these loans can be a blessing.
You will be able to get funds as soon as possible if your application gets processed on time. You can complete an online application within a short span of time.
The online form also lets the lender do the necessary steps without any complication. Thus, you can receive a speedy response from them because of the convenience of online procedures.
The bottom line
If you analyse closely, you will find that every loan option has something different to offer. No credit check loans and bad credit loans might show some common features but they differ in some ways as well. Keep them in mind while selecting loans.
Jessica Rodz is the Senior Content Writer at Cashfacts. She has a long career in the field of content writing and editing. Jessica has the expertise in the UK lending marketplace where she has worked with 7 different lending organisations and acquired many responsibilities from preparing loan deals and writing blogs for their websites.
At Cashfacts, Jessica is managing a team of experienced loan experts and doing a major contribution in guiding the loan seekers via well-researched blogs. She has done graduation in Business (Finance) and now currently doing research papers on the UK financial sector.
