Having a bank account is a common requirement when you’re applying for a loan. But for some reason, some people don’t have a bank account, to begin with.
“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.
Can I 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). So it’s important to consider your real ability to pay back the money that you’ll borrow.
Being able to secure a loan even when you don’t have a bank or checking account is a matter of knowing where to look and making the right decisions. Let’s dive in.
Know Your Loan Options If You Don’t Have A Bank Account
1. Personal Loans
A personal loan is a type of loan you can get for any purpose. You can find personal loans from banks, credit unions, and online lenders. However, without a bank account, it’s challenging to find a lender that’s willing to cater to you. You might find some luck with secured personal loans than an unsecured loan, meaning that you have to have collateral. An unsecured loan is riskier for the lender.
Requirements to qualify for a personal loan
- Collateral
- Proof of residence or citizenship
- At least 18 years old
- Government-issued ID
- Proof of income
Personal loan proceeds and repayments
You can borrow between $600 and $10,000, which you can pay from 12 to 72 months. You’ll receive the funds through a check, and you can pay back the loan online, by phone, by mail, or at the branch.
Personal loan costs and fees
The interest of personal loans varies depending on the loan amount, the loan terms, and the state where you live. Sometimes, bigger loan amounts have better APRs than smaller loans.
Your lender may also charge you with other fees, such as origination fees, late fees, and prepayment penalties. Here’s a sample personal loan calculator you can use.
2. Car Title loans
If you need quick cash loans without a bank account and you own a car, you can take an auto title loan. The car will be used as collateral, and the loan company may lend up to 50% of the car’s resale value.
Your car shouldn’t have a lien. You can still use your car, but your lender will hold its title. When you default on your payments, the lender has the right to take away your vehicle.
Requirements to qualify for car title loans
- 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 auto title 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
Auto 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. Payday Loans
Payday loans with no 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
Payday lenders charge loan fees 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 to compute payday loans.
Renew or Rollover
If you’re unable to pay back the money you owe on the agreed-upon due date, payday lenders may allow you to renew or roll over 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.
4. Pawn Loans
Pawn loans are another way of getting fast cash if you need a loan with no 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
Pawn shops don’t require a bank account nor do they consider the borrower’s credit record. 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.
5. Cash Advance
If you don’t have a bank account but you have a credit card, you can get money fast through a credit card cash advance. It would serve as quick cash loans without a bank account.
Cash advance means you can withdraw funds from your credit card through an ATM or at the branch. If your lender has this feature on your card, you don’t need any requirements to get the money you need. Although, the amount you can withdraw will depend on the balance your card has.
Credit card cash advance costs, fees, and repayments
A cash advance may not be the best option for you because of the fees you have to pay. For one, the APR is higher than what’s charged for regular purchases on your credit card. There’s also a credit card cash advance fee, typically at 5% of the amount you withdraw, and ATM or bank fees.
It can be tricky when you don’t pay the entire amount due on your card because the payment will go to your regular purchases first before the cash advance loans. So on-time and full payments are important. You may be able to get a monthly installment set up for your cash advance by calling your credit card company.
Can You Build Credit With No Bank Account?
A bank account or a checking account doesn’t have a direct impact on your credit score, but it supports your credit-building activities, such as making online payments or receiving loan funds. It’s challenging to build credit without a bank account, but yes, you can still do so.
How can you build your credit? 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 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:
- Open your first credit card account and make small charges that you can easily pay off.
- 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.
- 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 score. You can also become an authorized credit card user on someone else’s account.
- You can ask your utility companies or landlord to report your monthly payments to the credit bureaus.
- Pay your student loans on time, if you have any.
- 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 or checking account, which you can use for future loan applications.
Why Getting a Loan Without a Bank Account Is Hard
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 include 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
Try to Open a Bank Account
Consider opening a bank account or checking account now if you don’t have any. While you can turn to other loan options to get the money you need right now, you may still need to take out another loan in the future. Getting started now will make it easier to get approved next time.
If the reason you don’t have a bank account now is unpaid fees or overdraft, there are other options you can try. For example, some credit unions and banks offer second-chance bank accounts to people who have bad banking history.
If you’re worried about maintaining balance and fees, you can find one that has no minimum balance requirement and low fees. Shop around and consider both traditional and online providers.
FAQs on How to Get a Loan Without a Bank Account
1. Can I get a loan without a credit check?
Yes, you can get a loan with no credit check from online lenders, credit unions, or payday loan companies. 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
- Valid ID
- Working phone number
2. Can I get a loan when I’m unemployed?
Yes, it’s still possible to get a loan when you’re unemployed. You only have to prove that you have the ability to pay back what you owe. You need to set your expectations, though. Your lack of stable income will only qualify you for a lower amount. The lender may also charge higher interest rates and fees to compensate for the high risks.
Lenders may accept alternative sources of income as proof of your creditworthiness, such as
Social Security, long-term disability benefits, trust fund, rental property, pension, dividends, and alimony.
If you don’t have the sources to pay the loan, it’s best not to borrow while you’re unemployed. If you default on your loan payments, it will have a significant impact on your credit score. It may also affect your chances of getting a new job.
3. Can you lie about your income on a loan application?
No, you shouldn’t lie about your income on a loan application. Whether that’s lying about having an income when you’re not even employed or inflating your salary, it would be considered fraud. Don’t risk it because the consequences will be serious.
4. Do loan companies check your bank account?
Yes, most loan companies will check your bank account or checking account either by asking you to submit a bank statement or contacting the bank itself. They consider your banking history to gauge how you manage your finances and how risky you are as a borrower.
5. How fast can I get a personal loan?
Some lenders provide same-day approval, while others may take one to five business days. If you have no bank or checking account, or you have bad credit history, it may take longer.
Conclusion
Time will come when you’ll need a large amount of money, and it’s quite difficult to obtain without a bank account or with a bad credit score. Even so, you have other options, but you need to remember the higher charges and consequences of non-payments. Before you borrow money through the options we discussed above, make sure you’ve considered the alternatives in making your decision.
If you want to get the best deal on future loans, it’s important to start rebuilding your credit history and open a bank account as soon as possible. Having a savings account can lead to a long-term financial solution.
If you’re experiencing credit difficulties, you may need to seek credit counseling. You can find organizations that offer free credit repair advice.
If you’ve applied for a loan without a bank account or you can’t open one because of bad credit scores, please share your experience with us in the comments below!
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
