Can You Get A Loan Without A Bank Account




Published on October 28, 2020

Share on facebook
Share on twitter
Share on pinterest

Do you need to borrow money? Are you thinking of applying for a loan but having second thoughts because you don’t have a bank account? Are you finding it difficult to open a bank account because of your bad credit history?

“I need a loan but I don’t have a bank account.” This is one of the most common financial dilemmas of consumers these days. Even though it’s not easy to get a loan without a bank account, it’s not impossible.

In this article, you’ll learn how to obtain a loan without a bank account. You’ll also know the difference between unsecured and secured loans, and how you can build your credit history.

Can You Get a Loan Without a Bank Account?

Yes, you can still get a loan even if you don’t have a bank account. However, you’ll have to be prepared to pay more than the costs of taking out an average personal loan.

Most of your loan options will be short-term loans, such as:

  • Payday loans
  • Auto title loans
  • Pawn loans

All these options are more expensive because of their fees and annual percentage rates (APRs).

What are Your Loan Options if You Have No Bank Account?

1. Payday Loans

Payday loans without a bank account are short-term loans of up to $500 that are due after two weeks or on your next payday, depending on what’s been set on the payday loan agreement. Lenders in different states are expected to strictly adhere to payday lending state statutes

Aside from being the perfect option for those with no bank account, payday loans are the top choice of consumers with bad credit. You can apply for this type of loan online or through the payday lender’s physical branch.

Requirements to Qualify for a Payday Loan:

The government’s Consumer Financial Protection Bureau (CFPB) states that the basic requirements for a payday loan are as follows:

  • An active bank, credit union, or prepaid card account
  • Proof of income
  • At least 18 years old
  • Valid ID

Payday Loan Proceeds and Repayment:

Since you have no bank account, the loan proceeds and repayment will be done by cash or loaded on a prepaid debit card.

Payday Loan Costs and Fees:

The fees for a payday loan range from $10 to $30 for every $100 borrowed. However, the most common one is $15 per $100, which means you’ll have an APR of 400% for a two-week loan. The Truth in Lending Act (TILA) requires lenders to disclose the loan term, APR, and total loan costs and fees before extending credit. Here’s a calculator you can use.

Renew or Rollover:

If you’re unable to pay back the money you owe on the agreed-upon due date, lenders may allow you to renew or rollover the payday loan. This means you’ll be paying a certain fee to delay the due date of the loan, but the principal amount you owe and associated fees remain.

2. Car Title Loans

If you need quick cash loans without a bank account but you own a car, you can take a car title loan. The car will be used as collateral, and the loan company may lend up to 50% of the car’s resale value.

Requirements to Qualify for a Car Title Loan:

  • Proof of income
  • Government-issued ID
  • Car title in your name
  • At least 18 years old
  • Vehicle registration
  • Proof of residency
  • Proof of car insurance
  • A duplicate set of car keys

Car Title Loan Proceeds and Repayment:

Car title loans can be as low as $100 or as high as $10,000. The loan proceeds may be provided to you by cash, check, or money transfer services. You can settle the loan amount through a single repayment within 30 days, or you can break it into monthly installments the same way you received the money.

Car Title Loan Costs and Fees:

Car title loans are considered to be one of the high-cost loans in the market today. Lenders may charge as much as 300% APR on a car title loan. The monthly interest rate is usually at 25% and may include other fees, such as origination fees and document fees. Here’s a sample calculator. You can make your payments by visiting the lender’s physical location.

3. Pawn Loans

Pawn loans are another way of getting fast cash if you need a loan without a bank account or credit check. Just like a title loan, a pawn loan requires collateral for the money you borrow.

Requirements to Qualify for a Pawn Loan:

Pawnshops don’t require a bank account nor do they consider the borrower’s credit history. All you need to do is bring a valuable item to a pawn shop, such as the following: 

  • Jewelry
  • Tools
  • Musical and photography equipment
  • Electronics
  • Antiques and collectible items

Pawn loan Proceeds and Repayment:

Pawn Shops can let you borrow up to 60% of the item’s cash value. The proceeds are given in cash, and you’ll also get a pawn ticket with details of the interest rate and the loan term. 

Making repayments is easy. Just return to the pawnshop to pay the amount you borrowed and all other fees before the due date. If you don’t return to make payments during the specified duration, the pawnshop will keep the item. The term is usually one to four months, but you may be able to extend it for additional charges.

What are the Downsides to not having a Bank Account when Trying to Get a Loan?

Whatever your reasons are, not having a bank account comes with disadvantages, especially when you want to apply for a loan. Bank accounts are one of the most common requirements when applying for a mortgage or any traditional loan. Likewise, it’s often the method used to get the loan proceeds and to make loan repayments.

Although you can still take out a loan through other means, not having a bank account means your loan will have higher interest rates. Additionally, you’ll have lower chances of getting approved compared to applicants who have bank accounts.

Other downsides including the following:

  • Higher fees when cashing checks
  • Inconvenient bill payments
  • No protection and access to cash in case disaster strikes and your money is gone
  • No record of spending

What is the Difference Between a Secured and Unsecured Loan?

When you’re thinking of applying for a loan, you’ll have to consider whether you should go with a secured or an unsecured loan. But before you can make that determination, you should first know the differences between the two.

Secured Loans

A secured loan is a type of loan that is secured by collateral, which is anything valuable like a car or home. It will serve as a guarantee to the loan, which means if you default, the lender will take possession of the collateral.

A secured loan is the preferred option of those who don’t have a stellar credit history. Borrowers with low credit scores are considered as subprime borrowers, so collateral makes it less risky for lenders.

Secured loans include the following:

  • Mortgage loans
  • Home equity loans
  • Car title loans
  • Car loans

What are the Pros and Cons of Secured Loans?

Understanding the pros and cons of secured loans will help you determine if this type of loan is your best option.

The Pros
  • Since secured loans are tied to an asset, the lender faces less financial risk and may offer lower interest rates.
  • You may enjoy tax deductions for some types of secured loans like mortgages.
  • You’ll have higher chances of securing a loan approval because there’s collateral involved.

The Cons

  • The lender will seize the collateral when you fail to make payments.
  • The loan can only be used for a specified purpose. For instance, a mortgage can only be used to purchase a house while an auto loan is tied to the vehicle you wish to buy.

Unsecured Loans​

Unlike its counterpart, unsecured loans don’t need collateral. This type of loan is riskier for lenders because they can lose the money you borrowed if you default on your loan. Even though you won’t lose an asset if you fall behind in your payments, late or missed payments can cause significant damage to your credit score. Your lender may also take legal action against you, which will reflect in your credit history.

Unsecured loans include the following

  • Credit card
  • Medical debt
  • Student loans

What are the Pros and Cons of Unsecured Loans?

Just like secured loans, unsecured loans also come with pros and cons. Knowing their advantages and disadvantages will help you decide if you’re better off with this type of loan.

The Pros
  • Almost anyone of legal age can apply for an unsecured loan.
  • It doesn’t pose a risk to your assets since collateral isn’t needed.
  • It has faster approval.
The Cons
  • Since unsecured loans aren’t backed by any asset, they’re riskier for lenders, which translates to higher interest rates for the borrowers.
  • Unsecured loans are given in smaller amounts compared to secured loans.
  • Lenders can sue you in court if you fail to pay back the loan.

Can Secured and Unsecured Loans Affect Your Credit Rating?

Secured and unsecured loans can have positive or negative effects on your credit rating. Paying your loans on time, whether secured by collateral or not, will help build your credit score. When handled responsibly, these types of loans can pave the way toward homeownership, car purchases, and better cash management.

But if you fail to repay your debt, it will have a negative impact on your credit score, which may last for up to seven years. You may even lose your asset if you defaulted on a secured loan or face a lawsuit if you didn’t pay back your unsecured loan.

Banks vs Online Lenders: What are the Pros and Cons

Secured and unsecured loans can have positive or negative effects on your credit rating. Paying your loans on time, whether secured by collateral or not, will help build your credit score. When handled responsibly, these types of loans can pave the way toward homeownership, car purchases, and better cash management.

But if you fail to repay your debt, it will have a negative impact on your credit score, which may last for up to seven years. You may even lose your asset if you defaulted on a secured loan or face a lawsuit if you didn’t pay back your unsecured loan.

How to Get a Bank Loan with No Credit?

There are countless reasons a person has little to no credit score. Perhaps you just moved to the United States, or you’re a young adult who’s just starting to build a credit history. Or maybe you just prefer paying for goods and services with cash or a debit card.

If you find yourself in need of cash, but you’re wondering if you can get a loan even if you have no credit history at all, the answer is yes.

One option is to apply for a loan from a bank or a lender and use other financial documents to prove that you are creditworthy despite having little to no credit at all.

Be prepared to present documents, such as:

  • Employment history
  • Proof of income
  • Tax returns

Aside from bank loans, you may also consider getting a loan with no credit check from online lenders, credit unions, or payday loan companies.

How Can You Build Your Credit History?

If you have no credit or you have red flags on your credit report, there are things you can do to build or repair it. Building your credit history takes time and patience, but you’ll reap its benefits when the time comes, especially when you need to take out a loan. Here are some tips:

  1. Open your first credit card account and make small charges that you can easily pay off.
  2. Since you still have no credit or negative credit history, you’ll be better off getting a secured credit card. Make responsible charges and timely payments.
  3. If you’re unable to secure your own credit card, you can open a joint account with someone (a friend or a family member) who has a good credit history. You can also become an authorized credit card user on someone else’s account.
  4. You can ask your utility companies or landlord to report your payment history to the credit bureaus.
  5. Pay your student loans on time.
  6. Take out a secured loan like a car installment loan and make timely payments.

Building your credit history doesn’t happen overnight. It takes time, patience, and diligence. If you have no credit history, just follow the steps provided, and you’ll be on your way to having a positive credit score. Once that happens, it’ll be easier for you to open a bank account, which you can use for future loan applications


Time will come that you’ll need a large amount of money, and it’s quite difficult to obtain without a bank account or with a bad credit history. Even so, don’t worry too much because you have other options but please be very careful about the higher charges and consequences of non-payments. However, if you want to get the best deal, it’s important to start rebuilding your credit history and open a bank account.

If you’ve applied for a loan without a bank account or you can’t open one because of bad credit, please share your experience with us in the comments below!

Leave a Comment

Your email address will not be published. Required fields are marked *