If you don’t have a bank account, you’re not the only one. According to the Federal Deposit Insurance Corporation (FDIC), there are around 7.1 million Americans who don’t have a checking or savings account. There are several reasons why this happens. Some might have difficulty accessing a local bank, while others might be experiencing financial issues that keep them from maintaining the required minimum balance in their bank account.
Why Is It Difficult to Get a Loan Without a Bank Account?
While not having a savings account won’t generally be an issue, it will be difficult for anyone to get cash loans if they don’t have a bank account. Most loan providers require that you either have a savings or checking account before you can secure a loan.
Having a bank account allows lenders to verify your income and gives them insight into whether you will be able to pay or not.
It also shows how responsible you are with your finances. That’s the reason why banks and payday lenders require loan applicants, especially those with an unsteady income, to present their bank statements.
Most of all, it is easier for lenders to transfer the money you borrowed into your account via direct deposit. It streamlines the loan application process and it’s a safer method than issuing a check or giving the cash in person.
Do All Lenders Require a Bank Account?
Generally, you need a bank account to get a loan, but that doesn’t mean you have no other loan options left. There are still a few available options to get a quick cash advance, which we will discuss a little bit later in this article. But before that, let’s see how practical these options are.
First of all, you will still be able to find a lender who will give you a loan without an active checking account, but the interest rates are high. More so, these types of short-term loans also have a high annual percentage rate (APR) that can go as high as 500% or more.
Is it a hopeless situation, then? Not at all! You can do the following:
- Find a lender who offers a cash advance or personal loans that do not require a bank account.
- Find a credit card provider that will give you a credit with no checking account needed.
- Get a prepaid debit card, and use that to apply for a payday loan.
Getting a Personal Loan With a Prepaid Debit Card
Not all lenders will offer a personal loan with a prepaid card. So, you’ll need to do a little research to find a trustworthy loan company that does.
If they have this option, you’ll find that they work similarly to payday loans or a cash advance. You apply for a loan and they assess whether they will approve your application or not. If you get approved, they will direct deposit the money to your prepaid debit card within one business day.
Different Loan Options That Doesn’t Need a Bank Account
Here are the types of personal loans that do not require a bank account:
Payday Loans
Payday loans are a type of unsecured loan that will require you to fill out and submit an application with a loan company. An unsecured loan means you do not need any collateral to borrow money.
Payday loans typically last 7 or 14 days and are used by those who need extra money before the next payday, hence the name. They are usually for small amounts of money between a few hundred dollars and around a thousand dollars, depending on the city you live in and the lender.
Most people who avail of payday loans have a poor credit score, which means they will be lending money with a higher interest rate. Because of these interest rates, you need to ensure that you’ll be able to repay the loan before taking out one. Otherwise, you’ll find yourself stuck in a cycle of debt.
If you cannot pay back the loan, you might have no other choice than to roll your loan over to a new term. What happens is the lender will offer an extension to your loan in exchange for additional fees and interest.
Cash Advance
This term is used for several personal loans, the most common of which is withdrawing money from an ATM using your credit card. It’s similar to using an ATM for your regular checking account withdrawals—the only difference is that you will get the money from your credit card.
Be careful of the costs associated with a credit card cash advance. It might look like the easiest way to get fast money, but it might not be worth it. In addition, remember that a credit card cash advance does not come with a grace period. In other words, if you fail to pay, the interest on the amount you have withdrawn will keep piling up.
Aside from the interest charges, your credit card provider will most likely charge you a fee of around $5 or more. For example, if you cash advance $50, you might receive $5 on top of it, which is 10%.
Title Loans
Also called auto or car title loans, these types of loans use your car as collateral. Thus, it is considered a secured loan. The lender will keep the title of your car until you have fully repaid the loan. If you fail to repay or default, the loan company will repossess your car and sell it to cover the unpaid portion of your loan.
If the price of the vehicle is more than the unpaid amount, the lender will give you the extra money from the proceeds of the sale. If the amount is not enough to pay the whole loan amount, you will still have to pay the remaining balance.
Pawn Shop Loans
Pawn shop loans, also known as pawn loans, are where you secure a loan with a valuable item as collateral. In this loan type, you don’t have to worry if you have a bad credit history or no credit record.
A lot of pawnshops will give you the money the same business day you come into the pawnshop. Take note that the amount of the item you will be pawning should be worth more than the loan you are borrowing.
These pawn shops require at least a 120% value-to-loan ratio. In other words, the collateral must be around 120% of the amount of the loan you want to borrow. Also, be aware that if you do not repay the debt, the lender can keep your item or sell it to repay your debt.
Building Your Credit Without a Bank Account
Applying for a credit card might not require bank information; however, you need to ensure that it offers other payment options other than bank transfers if you don’t have a bank account. Getting a card and paying on time could help build your credit score and make you qualified to secure a loan in the future. Here are two tools how you can do that:
Secured Credit Card
These are backed by an upfront deposit that becomes your credit limit. Most banks will require you to deposit a bank transfer, while some will let you pay it by wire transfer or money order. After making several payments on time, you can get the deposit back and you might qualify for an unsecured card.
Credit-Builder Loans
Credit-builder loans work the same way as installment loans because you have to make monthly payments. Its main purpose is to help you build your credit score by putting your loan funds in a savings account until you can repay the debt. After the repayment term, you’ll be able to get the money in one lump sum and the interests, if any. Banks and credit unions are usually the financial institutions that offer these types of loans.
Depending on where you made the credit-builder loan, you can pay using a prepaid card. Take note that this type of loan requires a checking account because that’s where your money will be kept.
The Bottomline
There are many reasons why a lot of people do not have a bank account, but online banking has made everything easier and more affordable for anyone to open a bank account in a few minutes.
Since a lot of online banks have lower overhead costs, they offer more competitive loan options and lower rates. As you build a relationship with your bank, leverage these services to save and grow your money.
FAQ
How Can I Get a Bank Loan Without a Bank Account?
As mentioned above, you can get several online loans that do not require a bank account. Payday loans, pawn shop loans, and cash advances are the most common.
Most lenders will require some basic information like your ID, proof of income, and email address. While most lenders look for your credit history, some lenders don’t as long as you can show you have a regular steady income stream. Once approved, they will give you your money within the same business day.
Since you don’t have a bank account, you need to have a repayment plan schedule that works similarly to installment loans. You could repay your debt in person via money order or check.
Can I Get Payday Loans Without a Prepaid Debit?
Yes. A storefront payday loan does not require a prepaid debit card. All you need to do is go to a storefront payday lender, take out a small personal loan, and get your cash in minutes.
Some storefront payday lenders offer cash advances and other short-term loans even if you have a bad credit history.
What Is the Easiest Payday Loan to Get Online?
A payday lender offers cash loans with few hassles. They are categorized as easy because you can get them even if you have a bad credit history. They won’t even conduct a thorough credit check, a bank account, and collateral.
These lenders provide borrowers with several loan options without a high-interest loan.
Can You Get a Payday Loan Using Someone’s Bank Account?
Anyone can borrow money for themselves; however, you cannot get money from a payday loan deposited into another person’s bank account. Once you receive the loan, you can deposit it to another person’s account.
Can You Get Payday Loans With a Negative Bank Account?
Yes, you can. You have a chance of getting your loan approved even without a credit check or if you have a bad credit history. That’s one of the reasons why payday loans are popular even if they have high-interest fees.
