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Can You Get a Loan With No Bank Account?

By Anna Davies · December 23, 2021 · 8 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Can You Get a Loan With No Bank Account?

Sometimes, it can feel like you have to have access to money to get access to money. But when you’re in a tight financial spot, you may not have time to get your financial ducks in a row by setting up a bank account in your name. So if you don’t have a bank account, is it possible to get a loan?

The short answer: While it’s not impossible, it will likely be difficult to be approved, cost more in interest and fees, and may require collateral to guarantee the loan. But if you need money fast, there are options available.

Is It Hard To Get a Loan With No Bank Account?

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. One way they do this is to assess the applicant’s credit score because a bad credit score may mean the loan is riskier to the lender. When a loan applicant doesn’t have a bank account, the lender has more difficulty assessing their money history and credit score. There is little way to verify 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.

If you only have a joint bank account and want to separate your finances from the other bank account holder, it may make sense to set up a different, individual bank account before applying for a personal loan.

Borrowers may have more options available to them if they have a bank account in their name. But if a financial emergency arises and they do need money quickly, there may be options available that do not require a bank account. But these options may charge high interest, multiple fees, or could be challenging to pay back.

Can I Get a Loan With Bad Credit And No Bank Account?

As lenders consider a borrower’s risk, they will look at a borrower’s credit history. Credit history is one factor that determines whether a borrower’s unsecured loan application is approved and, if it is, at what interest rate. Applicants with poor credit and no bank account may be seen as a risk to lenders, and their application for an unsecured loan may not be approved.

They may, however, be eligible for a secured loan that’s backed by collateral, like a car or other asset of value, owned by the borrower. If the terms of the loan aren’t fulfilled and the lender isn’t paid back, the lender has the right to take that collateral as payment on the loan.

No Bank Account Loan Options

If you don’t have a bank account, you may be able to access a loan. But it may be more expensive and challenging than it would be for borrowers with a bank account. Weighing the pros and cons of each option can help you determine the right path for you. Potential options include:

Borrowing Money From Loved Ones

If you’re having a hard time financially, your loved ones may be able to step in. Whether you’re asking for money from friends or family, 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 misunderstanding.

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 loan problems are pronounced, 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, which can equate to up to 400% on a loan of $500.

A payday loan may require the borrower to have a bank account. When the loan is approved, the borrower gives the lender a signed and postdated check. Because the check is postdated for the day your paycheck is deposited into your bank account, the lender can cash the check on that date if you haven’t paid the loan by then. If there are insufficient funds in the bank account, then you may have additional fees from your bank, as well as fees from the lender.

Risk of Payday Loans

The drawbacks of a payday loan may outweigh the benefits. Because of the significantly high-interest rates and fees associated with payday loans, they can cost a borrower even more than credit card debt. Having a plan in place for paying back the interest on a payday loan can be critical in making sure a payday loan fits into an overall financial plan. If a borrower needs to make ends meet for a few days until a paycheck clears, it may make sense to consider other options.

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 an amount of money up to the value of the car. As with payday loans, interest can be quite high — as high 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.

Pawn Shop Loan

Someone with a valuable piece of jewelry, an antique, or other collectibles to use as collateral may consider seeking out 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.

Loan Options With a Bank Account

Borrowers with a bank account may have more options available to them than borrowers without a bank account. Having a bank account and proof of income may make a borrower seem less risky to a potential lender and offer more options and flexibility in comparing rates and finding a loan that works for them. Some types of loans available to people with a bank account may include:

Personal Loans

What are personal loans? A personal loan is a lump sum of money to be paid back, with interest, to a lender. One of the typical benefits of personal loans is a fixed interest rate and a payment that will be the same each month. The length of a personal loan can be between one to seven years, typically.

Because of the fixed interest rate of many personal loans, some uses of personal loans may be to consolidate other higher-interest debt, to pay for a large purchase, or to pay home remodeling expenses.

Auto Loan

If you’re buying a car, an auto loan specifically designed for purchasing a vehicle may make sense. As with other loans, a lender typically looks at the applicant’s credit history, income, and other factors to approve the loan at a certain interest rate.

Student Loans

To fund educational expenses, a federal or private student loan might be appropriate. Student loans don’t necessarily just cover tuition — they can also be used for other education-related expenses and living expenses while the borrower is in school.

Your school’s financial aid office may have tips and resources for accessing loans, scholarships, or grant funds if you don’t have a bank account. It may also be a good idea to talk to the financial aid office at your school about paying back any student loans you accept to make sure you’re not borrowing more than you can afford to repay.

Recommended: Grants For College – Find Free Money for Students

The Takeaway

Options for loans are probably more easily found for borrowers with bank accounts and solid credit history. But borrowers who don’t have either may still have options. Considering the pros and cons of each avenue can help a borrower decide on their best course of action.

If you do have a bank account, then you may want to consider a personal loan. As with any financial step, consider the pros and cons of all options and choose a loan that fits into your overall financial goals. With SoFi, you can apply for personal loans via an easy, online application and view your rate in just one minute. Checking your rate won’t hurt your credit score.* SoFi Personal Loans have fixed rates and terms that fit a variety of budgets.

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Photo credit: iStock/MicroStockHub

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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