Helpful Alternatives to the No Credit Check Loan

Posted on January 10, 2009 @ 2:40 am
by Mary Bush

You’ve likely seen the ads and hoopla surrounding no credit check loans. However, you may still be curious to know exactly how they work. The truth is that there are many cheaper alternatives to these loans. A no credit check loan is perhaps the most expensive way of getting by until payday comes. You have undoubtedly seen the commercials that offer $100 or $1,000 in your account fast with nothing but a signature. Aggressively marketed to those who have no credit cards and perhaps bad credit, the lenders have found an eager market of those whose misfortunes force them to seek alternate ways of getting a bit of extra cash to meet dire emergencies or make up for lost pay.

It is not a rarity to see single moms with a gaggle of kids at the payday loan places where a no credit check loan promises to keep on the utilities and put some food on the table until the next paycheck will be deposited. Unfortunately, by the time the next paycheck is indeed deposited there are other emergencies, other problems, and other bills that need to be paid. Add to this the fact that the average no credit check loan costs about $15 to $30 per $100 borrowed, and you can well imagine now expensive this short term loan really is.

If you find yourself short in between paydays, a no credit check loan should be avoided at all costs. There are a number of alternatives available which, even though practically they are not desirable as everyday financial budgeting tools, are better than signing your life away with a payday loan. Take for example the overdraft on your checking account. While it is most certainly not desirable to rely on the overdraft protection on your account, if you must float a check for five days, you will be able to do so.

Inform yourself about the provisions of the overdraft protection on your particular account, how long you have to make good on the negative balance, and how much you will be charged. Best case scenario, you will be able to write yourself a check for $500 and only be charged $28 as opposed to the $125 you would have to pay in fees if you were to take out a no credit check loan.

If you do not have a bank account with overdraft protection, check your credit cards’ cash advance policy. Typically you will have to pay about 5% of the amount for which you write the check plus the interest. If you are able to pay off the loan when payday comes, then this cash advance will only cost you $25. Should you not have a credit card, speak to your employer about a payday advance. Some employers are willing to work with their associates, especially those that only pay once a month. Friends, family, and your church’s or synagogue’s emergency funds are another option for those who want to avoid the high fees of the no credit check loan.

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