Be honest with yourself and balance out how much you need that money, and if it’s something that can’t wait. It is important to exhaust all other options before diving into a loan. Remember, even the best of loans is a bad deal if it doesn’t align with your priorities.
That’s not to say you should ask for a loan at the dying minute. For example, if you’re struggling to pay rent and one step away from being evicted. Do you need a loan for a fancy wedding? Take it! Do you want a loan for a long-overdue family vacay? Go ahead! Do you wish to know what your bank account looks like with a few extra digits? Sure! Just make sure it’s something you’re not going to regret in the long run.
Credit Score/Credit History
The better your credit, the easier it will be to get a loan approved. But, what is a bad credit score?
A credit score is basically a numerical representation of your relationship with expenses. That’s why it can be so easy to get declined for loans based on a bad score. This can end up making it harder and harder to get out of the debt loop. According to the FICO score scale, any score under 579 is bad, between 580-669 is fair, and any score higher than 670 is good or excellent.
Amount to Borrow
Directly related to the previous factor, the lower your score, the harder it will be to request significant sums of money, and not all no credit check loans platforms offer the same loan limits.
The lowest loan amounts are around $200 or $500 and can go up to $35,000. Knowing how much funding you need is essential to educate all of your choices.
For lower loans, it might be easier to handle something with less commitment. Meanwhile, for higher amounts, you’ll be likely asked to offer more detailed information, cosigners, and collaterals.
Repayment Terms and Time Frame
Would you rather pay higher amounts for a shorter time frame? Or a smaller amount for a longer time frame? Repayment terms and frequency of payments depend on the lender and the amount requested. You can find online loans with repayment terms as short as 30 days or as long as 96 months (eight years).
For shorter time frames, the monthly fees will be higher and thus may be harder to manage with the addition of your monthly expenses. In contrast, for more extended time frames, the fees are usually lower. But this commodity comes at the cost of higher interest rates and a higher amount to repay.
Annual Percentage Rate (APR)
APR is the annual cost for the money borrowed and the gross amount to be repaid, with all rates applied. This includes expenses like prepayment and origination fees.
APR should be one of the first things you see on a potential lender’s website. The lack of ready information on the total amount to pay is one of the ways to spot a predatory loan. Your lender should want to offer you a good deal that you can realistically pay. If you don’t see this information anywhere on hand, that probably means the lender is trying to keep you in debt in the long run, driving you into an endless debt spiral.
Credit Score and History
Potential lenders will request a basic overview of your credit score and credit history. Even if a lender is willing to work with a bad credit score, they will likely want to check it to properly and optimally adjust the deal.