Guaranteed Loans with No Credit Check

by Anita Vasquez

There’s only one reason you don’t want lenders checking your credit as part of a loan application – your credit stinks. Really bad credit guarantees really expensive loans.

So if you want guaranteed loans no credit check, you’d better be prepared for the consequences. It’s not an exaggeration to say that taking on this kind of debt could take a bad financial situation and turn into a total personal finance nightmare.

I’m convinced that the majority of people who take out any sort of guaranteed approval personal loan have no idea what it could do to them long term. The interest rates are so high that you can end up paying back two or three times the original loan amount within just a few months. This isn’t a house we’re talking about. It’s an unsecured loan you’re probably borrowing to pay some utility or medical bills.

Even if you are able to pay back the loan on time, this kind of financing has been proved to be habit forming. I read a government report that said the majority of short-term borrowers (ie payday loan situations) use this kidn of financing multiple times.

So let’s say you take out a $1,000 guaranteed approval loan that costs $100 in fees and interest. You pay it back in two weeks. You wouldn’t be out of the ordinary if you did this five times in the course of a year. That’s $500 in interest and fees paid on…nothing! You didn’t borrow money for any kind of appreciating asset. You borrowed money to keep your lights. Yes, you need lights, but they shouldn’t be paid for with a triple-digit interest loan.

How to Avoid this Type of Loan

It’s simple, really. The only time people borrow money this way is when they’ve run out of cash and have pressing bills. The simple solution is to have an emergency fund in the bank. Yes, conventional wisdom say says you should have six months worth of expenses in the bank, but that’s a ludicrous number for most people.

If you maintained a small personal slush fund of even $1,000 you’d probably save yourself from ever having to borrow awful payday loans again.

It won’t be easy to build up your $1,000 reserves, but if you take a long term view you can get there. Work a few hours of over-time. Do some odd jobs for friends and family. You will be amazed how much better you sleep at night with a little rainy day fund in the bank.

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