At a Glance
Typically, when you apply for a loan, the lender considers factors like your credit score and history, income, other debts, and other factors. However, if you don’t have a bank account, they don’t have something to look at to judge your savings or financial history. This makes it more difficult to qualify for a loan, but not impossible. There are some types of loans that don’t consider those financial factors and instead use collateral to secure the loan.
However, there are risks to these types of loans, so it’s important to understand and weigh your options before borrowing. In this article, learn more about:
Can you get a loan without a bank account?
The short answer is yes, you can get a loan without a bank account. However, you may find it difficult or even impossible to qualify for the standard unsecured loans you may get from a bank, credit union, or online lender. Instead, you may only qualify for a secured loan.
With a secured loan, the borrower uses some sort of asset (like a car, house, savings account, or other asset) as collateral against the loan. If you don’t repay the loan, the lender can then seize the asset. With unsecured loans this is not necessary, and instead the lender looks at your credit score, history, income, and other factors to assess your risk level.
There are a few types of loans you can qualify for without a bank account, but it’s important to thoroughly do your research to choose the right type for you because while they give you quick access to cash, they also have drawbacks.
Why is it hard to get a loan without a bank account?
A lender will look at several factors to assess your “risk,” which is how likely you are to repay the loan. If your risk is too high, the lender may decide not to let you borrow the money. A bank account plays a big role in this because it helps give insight into your financial situation. Not only does it help verify your income, but also gives them an idea of whether you have enough savings to keep up with loan payments.
If the bank is unable to verify your savings and ability to repay the loan, they may find it’s too risky to lend you the money.
Additionally, loan funds are typically deposited into your bank account, so some lenders require one as a place to send the loan funds.
Loans you can get without a bank account
There are several types of loans you can get without a bank account, but your options may still depend on other factors. The downsides to some of these loans may outweigh the ability to get them without a bank account, and because opening a bank account is typically easy and free, you may want to consider opening one so you can apply for an unsecured loan.
If you don’t want to open an account, here are your options:
1. Payday loans
Payday loans are short-term loans that allow you to borrow a small amount of money due on your next payday. Typically, these loans are $500 or less, and are seen to help you get from one paycheck to the next or help with unexpected or emergency expenses.
The biggest downside to payday loans is the high fees. According to the Consumer Financial Protection Bureau, the fees for a payday loan can be equal to an APR of nearly 400%. Additionally, these loans are small and the due date is your next payday (usually two to four weeks) after you take out the loan. These loans can quickly lead to a debt spiral, with fees adding up fast if you don’t repay the loan plus fees by the due date.
Related: How to Get Out of Payday Loan Debt
2. Pawn shop loans
Pawn shop loans are loans you can get when something of value, like a piece of jewelry, is used as collateral for the amount you borrow. The lender will give you cash for the item, and if you don’t repay the loan, they will keep it. These loans also have significantly high fees which can make them difficult to repay, leading to a debt trap and increasing the likelihood you’ll lose your pawned item.
3. Payday alternative loans
These loans may be a better option than payday loans because the interest rate is capped at 28%, so you won’t owe as much in fees. Additionally, the application fee is lower, the borrowing amount is larger (sometimes up to $2,000), and repayment terms are longer (from one to 12 months).
Payday alternative loans are offered by a federal credit union, so while you must be a member in order to borrow the money, it may be worth it if you need cash fast and don’t have a bank account. Visit your local branch for more information.
4. Title loans
To get a title loan, you must own your vehicle because the loan is secured with the vehicle’s title. Usually, the due date for these loans is your next payday (within two or four weeks) and as with payday loans, there are several downsides including high APRs and the possibility of losing your vehicle if you don’t repay the loan. Plus, the loan amount you can apply for depends on how much equity you have in the car. While you may be able to borrow up to $5,000 or more, some loans are as little as $100.
5. Loans from friends and family
Depending on your situation, borrowing from friends or family may be a better option than some of the above. These loans typically don’t come with fees or quick repayment timelines that other types of secured loans do. However, you could risk damaging a relationship with your loved one if you don’t repay the loan. Be sure to weigh the pros and cons here.
Next steps after you get a loan
If you’re considering one of the above loans, it’s critical to look at the interest rates, fees, and terms to determine whether you’ll be able to repay the loan on time and avoid additional debt or losing your assets. Getting a loan without a bank account can be risky and expensive (unless you borrow from a family or friend), so consider opening a bank account before committing to a loan. If necessary, you can explore second-chance bank accounts.
If you do take out a loan, be sure you know when it’s due and how much you owe after fees. Prioritize ensuring you repay the loan by the due date to avoid the negative consequences.
Yes – loans like payday loans, title loans, and pawn shop loans can be options if you need cash but don’t have a bank account. However, these options come with risks and are expensive, so consider other options like borrowing from friends or family or opening a bank account so you qualify for other types of loans.
You can apply for some secured loans, like a pawn shop or title loan, where you provide an asset as collateral to the loan. The downside is you can lose the asset if you don’t repay the loan on time, and these loans are often very expensive. Consider borrowing from friends or family instead.
Payday loans, pawn shop loans, and title loans all give you access to cash fast. Additionally, you can try other options like a cash advance when you use a normal credit card to withdraw cash.
Getting a loan without proof of income is difficult, but not impossible. You likely won’t qualify for any unsecured loans or payday loans (since you don’t have a paycheck), but you may qualify for secured loans like title loans or pawn shop loans. These loans use assets as collateral instead of checking your credit score or income.