If you don’t have a bank account, either because you prefer to pay in cash or due to a poor banking history, you will likely run into a few obstacles when trying to get any type of loan, including a personal loan.
While it’s not impossible to get a loan if you don’t have a bank account, it can be difficult to get approved, will likely cost more in interest and fees, and may require collateral to guarantee the loan. However, if you need money fast, there are options available. Here’s a look at how to get loans without a bank account.
Is It Hard To Get a Loan With No Bank Account?
Generally, yes. Not having a bank account — in particular, a checking account — can make it difficult to qualify for a loan.
When you apply for a personal loan (or any other type of loan) the lender will typically ask for your bank account information and the last one to three month’s worth of bank statements. This helps them verify your income and gives them an idea of whether you have the cash to keep up with your loan payments.
However, if a financial emergency arises and you need money quickly, there may be loan options available that do not require a bank account. The hitch is that these loan products typically come with high interest rates, multiple fees, and short repayment terms.
Why Is Getting a Loan With No Bank Account Hard?
When a lender assesses an applicant, they consider how risky the loan might be to their own business. In other words, they want to predict how likely it is that the borrower will be able to pay the loan back. When a loan applicant doesn’t have a bank account, the lender has more difficulty assessing that person’s income or cash flow.
There is also a logistical issue: Where should the lender send the loan proceeds? Typically, the money is sent to the borrower’s bank account. But if the borrower doesn’t have a bank account, there may be some question of where the money will be deposited and how it will be accessed, as well as how loan payments will be made.
Can You Get a Loan With Bad Credit and No Bank Account?
It’s possible but it might not may not be a good idea, since your options will be limited and expensive.
To assess your risk as a borrower, lenders will not only look at your banking history but also your credit history and scores. Your credit reports contain a record of how you’ve handled credit accounts in the past, including whether you pay your bills on time, what types of credit you use, how much debt you carry, and any delinquencies and collections you’ve experienced. This information is used to calculate your credit scores. Borrower’s with excellent credit are not only more likely to qualify for a loan, but also get the best rates and terms.
If you have poor credit and no bank account, you will likely be seen as high risk to lenders. If you’re applying for an unsecured loan (meaning no collateral is required), you may not be approved.
You might, however, be eligible for a secured loan that’s backed by collateral, such as a car or other asset of value that you own. If you are unable to repay the loan as promised, the lender has the right to take that collateral as payment on the loan.
Pros and Cons of Loans With No Bank Account
If you’re looking for a loan with no bank account, you’ll want to carefully consider the pros and cons.
Pros of No Bank Account Loans
• Fast access to cash No bank account loans, such as payday and title loans, typically provide a lump sum of cash right away.
• No credit check Some no bank account loans won’t take your credit history or score into account, allowing borrowers with bad credit or who haven’t yet established any credit to access funds.
Cons of No Bank Account Loans
• High costs Lenders who consider applicants with no bank account generally make up for risk by charging extremely high interest rates and fees.
• Short repayment terms Unlike other types of personal loans, which usually give you years for repayment, no bank account loans (such as title loans and payday loans) often need to be paid in 30 days or less.
• Can lead to vicious debt cycle Due to the short repayment terms for no bank accounts loans, borrowers often need to roll the loan over into a new short-term loan, leading to a cycle of debt.
5 No Bank Account Loan Options
Even if you don’t have a bank account, you may be able to access a loan. Here’s a look at some potential options.
1. Borrowing Money From Loved Ones
If you’re having a hard time financially, your loved ones may be able to step in. Whether you ask for money from friends or family members, it’s a good idea to have clear, written loan terms, and maybe even have the loan agreement notarized so there’s no confusion. Make sure expectations are clear for each party.
• Does the loan have interest attached?
• Are you expected to pay back the loan or is it a gift?
• Are there in-kind options for paying back the loan, such as babysitting or tutoring hours?
• What would happen if you were not able to pay back the loan?
Answering these questions can help create clear expectations and lessen the chance of a misunderstanding that could strain your relationship.
2. Payday Loan
A payday loan is usually for a small amount (often $500 or less) for a short period of time, typically until the borrower’s next paycheck. While it can be a source of quick cash, payday loans are problematic, given their high annual percentage rates (APRs).
Some states may cap the maximum allowable APR, but many payday loans charge fees of $10 to $30 for every $100 borrowed. A fee of $15 per $100 equates to an APR of almost 400%, which is significantly higher than the APR of a typical personal loan. If you can’t pay back your payday loan quickly, the fees can add up fast and make your existing financial problems snowball.
Risks of Payday Loans
The drawbacks of a payday loan may outweigh the benefits, and include:
• High fees Lenders charge exorbitant fees and APRs for payday loans just in case the loan can’t be paid off.
• Debt spiral If you can’t repay your payday loan on time, you’ll have to roll it over into a new loan and end up with even more fees and interest charges. This makes the loan even harder to pay back and can lead to a dangerous debt spiral.
• Small loan amounts If you need a large sum of cash, a payday loan likely won’t offer enough, since they are usually $500 or less.
3. Title Loans
If you own your vehicle, you may be eligible for a title loan. Also called an auto title loan or vehicle title loan, this type of loan uses your vehicle as collateral. The lender holds your vehicle title in exchange for the loan. You then may be able to borrow a portion (often 25% to 50%) of the vehicle’s current value. As with payday loans, interest can be exceptionally high — as much as 300% — and there may be additional fees. If you are unable to pay back the loan, the lender has the right to take ownership of your vehicle. This can be a high-stakes situation for borrowers who depend on their car to go to work and school.
4. Pawn Shop Loan
If you have a valuable piece of jewelry, an antique, or other collectible to use as collateral, you might be able to get a pawn shop loan. The pawnbroker will assess the value of the item and provide a loan based on a certain percentage of its value. The loan terms will include interest. If the loan isn’t paid back according to the terms, the pawnshop then owns your item and can sell it.
5. Cash Advance
A cash advance is a short-term loan typically offered by your credit card issuer. A credit card cash advance allows you to borrow a certain amount of money against your card’s line of credit. You can usually get the cash at an ATM or through a bank teller.
A cash advance is a way to access quick cash but the interest rate will likely be higher than your card’s standard purchase APR, and higher than interest rates on personal loans. In addition, you typically need to pay a hefty cash advance fee.
Loan Options With a Bank Account
Before looking into loan options with no bank account, you may want to consider opening a checking account. If you’ve had past checking account errors or misuse, look into a second chance checking account. These accounts are designed to help people who have negative banking history get back in the door.
Borrowers with bank accounts generally have more — and better — loan options available to them. If you are able to open a checking account, here are types of loans you may be able to access.
Personal Loans
A personal loan is a lump sum of money borrowed from a bank, credit union, or online lender that you pay back in regular installments over time. Loan amounts can be anywhere from $1,000 to $50,000 and repayment terms range from two to seven years. Personal loans have fixed interest rates, so the monthly payment is the same for the life of the loan.
Personal loans are typically unsecured, meaning they’re not backed by collateral. Instead, lenders look at factors like credit score, debt-to-income ratio, and cash flow when assessing a borrower’s application.
You can generally use a personal loan for almost any purpose, including debt consolidation, home improvement projects, medical bills, emergencies, and refinancing an existing loan.
Auto Loan
An auto loan is a loan that is used specifically to purchase a vehicle. They are available through banks, credit unions, and online lenders. Typically, auto loans are secured loans, which means the vehicle to be used as collateral for the loan.
When you take out an auto loan, the proceeds go to the vehicle’s seller to cover the cost of the vehicle. You then make monthly payments to the lender for a set period of time, which might be anywhere from three to eight years. The lender owns the car and holds the title until you pay off the loan. If you fail to keep up with payments, the lender can repossess the vehicle.
Student Loans
A student (or education) loan is a sum of money borrowed to finance college expenses, including tuition, supplies, and living expenses. Payments are often deferred while students are in school and, depending on the lender, for an additional six-month period after earning a degree.
Student loans are available from the government as well as through private lenders. Federal loans may have lower interest rates, and some also offer subsidized interest (meaning the government pays the interest on the loan while a student is in college). Private student loans are generally available in higher amounts.
The Takeaway
Getting a personal loan with no bank account may be possible but can be both costly and risky. Before committing to a lender that charges high interest and fees or requires collateral, you may want to explore opening a bank account.
Once you have a checking account, you may be able to access traditional personal loans with more attractive rates and terms. You might also want to consider a SoFi Personal Loan. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
FAQ
Can you get a loan without a bank account?
It’s possible, but you will likely be limited to loans with sky-high rates and short repayment terms, such as payday loans, pawn shop loans, and title loans. The lender may also require collateral (an asset you own, such as a car) that they can seize if you don’t repay the loan.
Can you get a loan with your SSN?
Having a Social Security number (SSN) can make getting a loan easier, since a lender can use it to retrieve information they need to process the loan. In addition to an SSN card, you also typically need to provide:
• An additional proof of identity (such as a birth certificate, driver’s license, passport, or certificate of citizenship)
• Proof of income (e.g., pay stubs, tax returns, and bank statements)
• Proof of address (such as a utility bill, rental agreement, bank/credit card statement)
Can you get a cash advance without a bank account?
It’s possible, but it may be hard to find a lender who is willing to work with you. Your best option might be a credit card cash advance, which involves withdrawing cash from an ATM or bank using your credit card account. Just keep in mind that credit card advances generally come with high interest rates and fees.
Another option for fast cash might be a payday or title loan. Some lenders who offer payday and title loans might consider applicants who don’t have bank accounts but, to offset the risk, may require collateral (such as a car) they can take if you fail to repay the loan.
Photo credit: iStock/MicroStockHub
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SOPL0723016
