Can you borrow money without a bank account? Yes, you can. However, your choices may be fewer, and the loans may have to be paid back more quickly.
If you do not have a bank account, you might only be able to get short-term loans like payday loans or small personal loans, which usually have to be paid back within a year. Options that do not need a bank account, like loans where you use your car as collateral, can cost a lot more. This is because of high interest rates.
Six Types of Loans With No Bank Account
The following are six types of loans you can get even if you do not have a bank account:
- CDFI Loans: Some nonprofit organizations, called Community Development Financial Institutions (CDFIs), offer loans to people in low-income areas. These loans are an alternative to payday loans. The best part is they do not always require a bank account.
- Personal Loans: Although they are not common, some companies offer personal loans to people with bad credit without needing a bank account. One example of these companies is OneMain Financial. Sometimes, they might ask for bank statements to prove income, but they do not always do this.
- Credit Card Cash Advances: If you have a credit card, you can get quick cash by borrowing from your available credit limit. However, you will have to pay fees. Also, the interest rate for cash advances is usually higher than for regular purchases.
- Vehicle Title Loans: With a title loan, you can use your car’s value to borrow money. You can borrow 25% to 50% of your car’s worth and sometimes up to 90%. Some lenders do not require a bank account if you apply in person.
- Pawn Loans: At pawn shops, you can give them valuable items, like jewelry, as collateral for a loan. They will lend you a percentage of the resale value of your item. This is usually between 25% and 60%. Once you pay back the loan, they will return your item.
- Payday Loans: Payday advances are small, short-term loans you must repay quickly. Usually, you have to pay back this type of loan within a few weeks or a month. If you apply in person, some payday lenders will let you handle the process in cash or through a money transfer.
Remember that these loans can be expensive, with very high interest rates (APRs). Sometimes, people end up in more debt because they must borrow again to repay the original loan. If you need a small loan, consider using cash advance apps. These apps do not charge interest or fees; they are cheaper options.
ALSO READ: Can You Use a Personal Loan to Buy a House
How To Get a Loan Without a Bank Account
It can be harder to get a loan if you do not have a bank account. However, it is still possible. The process is similar to getting a loan with your bank account, except you do not need to provide bank statements. Here is how you can get a loan without a bank account:
- Check Your Credit: If your credit score exceeds 670, you will have more loan options. Knowing your credit score will help you find lenders willing to accommodate your situation.
- Compare Lenders: Before applying for a loan, you should compare different lenders. Look at their interest rates, the amount they lend you, and their reputation. You should also check all the terms and conditions of the loan to see which one fits your needs.
- Gather Documents: Once you find a lender, collect the required documents. This can include recent pay stubs, proof that you live where you say you do, a valid ID, your Social Security Number (SSN), and your contact information. Different lenders may ask for various things.
- Apply for the Loan: After you have all your documents, submit them to your chosen lender. Then, you must wait for them to decide whether they will give you the loan.
The type of loan you are applying for, whether secured or unsecured, will determine the documents you need. For example, if you are applying for a car loan with your car as collateral, you must provide the car’s title without any debt. A trustworthy lender will explain what they need from you and what is expected for the loan.
ALSO READ: How to Transfer a Car Loan to Another Person
Why Do Most Lenders Require a Bank Account?
Most lenders ask for a bank account because it tells them much about your finances. When they look at your bank statement, they can see how much money you have and how you manage it. Lenders usually want to know that you have saved some money and that your balance is not negative.
Having a bank account also makes it easier for lenders to give you a loan and collect repayments. They often use a system called Automated Clearing House (ACH) to transfer money. This only works if you have a bank account.
Additionally, having a bank account will show lenders that you are good with money and not too risky to lend money to. If they think you are less risky, you have a better chance of getting the loan with reasonable interest rates.
5 Lenders That Offer Loans Without Requiring a Bank Account
The following are five lenders that do not require a bank account:
- OneMain Financial
- Max Cash
- LoanMart
- Dollar Loan Center
- Check City
It is possible to get a loan even if you do not have a bank account. However, opening a bank account is a good idea because it gives you more loan choices. Most lenders that offer the best loans usually require a savings or checking account to check your finances and send you the loan money.