How to get a loan without a bank account


The United States Government Accountability Office (GAO) said that people in more than 7 million American homes did not have a bank account in 2019. The GAO also said that the top three reasons for not having a bank account or checking account were that people said they did not have enough money, that banks charge high fees, and that they don’t trust banks. Other reasons included not being comfortable about their privacy being protected, not being able to get an account, bank hours and locations that don’t work for them, and wanting to only use and carry cash. One possible problem with not having a bank account is that if you don’t have a bank account, you might not be able to get some personal loans, especially unsecured loans. The good news is that there are still personal loan options for people who do not have a bank account.

Why is it difficult to get a loan without a bank account?

When you apply for a personal loan, the lender will probably ask about your bank history. Why? Because it allows them to see your income and let them know that you have enough money to repay the loan. Lenders may be uncomfortable giving you the money if you have no bank account to show that you have the money to pay back the loan. When lenders are deciding to give out a personal loan, they may be taking a risk. If you don’t have a bank statement, checking account, or credit score to show the lenders that you’ll be able to make your payments, they may think it’s too risky and decide not to give out a personal loan, especially if it’s unsecured.

Do all lenders require a bank account?

NNo. There are some lenders that will issue a personal loan without a bank account.

Loan options if you don’t have a bank account

As we mentioned, there are a couple of options if you’re looking for a personal loan but don’t have a bank account or checking account.

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Payday or Title Loans

Payday or title loans are options if you need emergency cash. But these should be your last loan options. A payday loan is a short-term loan that is usually a few hundred dollars-it’s called a “payday” loan because you usually must repay the loan, plus fees, when you get your next paycheck.

This usually gives you a couple of weeks to repay. A title loan, also known as a “car title loan,” is another way to get quick cash. These loans are usually for anywhere between 25% to 50% of the car’s value and many times have to be paid back to the lender within a month. To get a title loan, you must own your vehicle and be willing to offer the vehicle as collateral if you can’t repay the loan. That means you could lose your car if you can’t pay the loan back. While this may seem like an easy choice if you need cash quickly, there are a lot of negative aspects to both payday and title loans.

You may want to avoid payday loans because of:

High fees: Lenders charge very high fees and APRs for payday loans just in case the loan can’t be paid off. For example, a two-week payday loan that charges a $15 per $100 fee equals an APR of almost 400 percent. That is outrageously high and can quickly lead to problems such as a debt spiral.

Debt spiral: If you can’t repay your payday loan on time, you may end up in worse shape than before you got the loan. That’s because the lender’s high fees and interest rates will continue adding to your debt, making it even harder to pay it back.

Small loan amounts: If you’re looking for a large amount of cash, a payday loan probably won’t be enough for you since they’re usually $500 or less.

You may also want to stay away from title loans because:

Equity in your car: Your title loan will depend on how much equity you have in your car. These amounts are usually between a few hundred and a few thousand dollars. If you don’t have any equity in your car, you probably won’t get a large loan.

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High fees: According to the Federal Trade Commission (FTC), title loans charge an average fee of 25% each month. This is equal to an APR of around 300%, also a very, very high number.

Possible car repossession: When you’re taking out a title loan, you’re putting your vehicle up as collateral for the lender. So, if you can’t repay the lender, they can legally take your car from you and sell it to get back their money.

Family and friends

This could be an easy fix to a money emergency-ask a friend or a family member to borrow the money you need. Doing this will probably help you avoid expensive interest rates and fees as well as short time periods to pay the money back. But there is also a possibility that relationships might become strained if the money is not paid back.

Payday alternative loans

There are some good things about payday alternative loans. But the one bad part is that these loans are usually only given out by a credit union. If you don’t have an account with a credit union, you may not be able to get a payday alternative loan. Good things about these loans include:

● Rates lower than what payday or title lenders may offer

● Low application fees ($20 or less)

● More time to repay the loan (up to a year)

● Loan amounts up to $2,000

How to build credit without a bank account

Having a bank account and a banking history does make it easier to build your credit score, but you can still establish credit and a credit history with no bank account or checking account.

Here are a few ways:

Secured credit cards

With a secured credit card , you must make a cash security deposit (as a form of collateral) when you open the account, which you can do through a wire transfer or a money order. This provides lenders some safety in loaning the money to a borrower without a known credit score or credit history. If payment is not made on the credit card’s balance, the credit card issuer can simply take money from the security deposit to pay it. A good thing about secured credit cards is that once you make enough on-time payments, you can make a bad credit score better and then you may be able to get an unsecured credit card that does not require an upfront deposit or collateral.

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Credit-builder loans

A credit-builder loan is perfect for borrowers who have no credit or bad credit scores because they allow borrowers to take out a small amount of cash to prove that they can pay back their loan on time. Making regular on-time payments on a credit-builder loan can help build a good credit score or history. These types of loans are different from regular loans. For example, a credit-builder loan is deposited into a certificate of deposit (CD) or a savings account by the lender. This money is held as collateral, which you will not get back until the loan has been repaid. You can do this through monthly payments plus interest. Depending on the loan, the lender might release some of your borrowed money from the CD or savings account once you make a monthly payment. These loans, usually offered by credit unions, community banks, and online lenders, are usually around a few hundred dollars.

The Bottom Line

Getting a personal loan is possible without having a bank account, but it’s much easier-and cheaper and less risky-to get a personal loan with a bank account. If you are thinking about opening a bank account and taking out a personal loan, search for banks with low or no fees. Sun Loan has been helping people understand their options and providing our customers with opportunities to build their credit for 30 years.

Our personal installment loans are the perfect way for borrowers to receive the money they need while they build their credit score by making on-time monthly payments. Sun Loan’s friendly and professional loan specialists work with each customer to ensure an affordable payment plan that fits their needs, unlike other lenders that only see people as credit scores. Let’s work together to find the solution you need. Stop by one of our many convenient local branches or call us at (800) SUN-LOAN to speak to a professional loan specialist!