Can You Get Bad Credit Loans With No Bank Account?

If you live in one of the 5.6 million unbanked households in the U.S., you understand the financial stress of living without a checking or savings account. You have to take your paycheck to a check-cashing store just to get your money, pay the fees they decide to charge, and pay all your bills in cash through the mail or in person, which is a hassle compared to doing them online. The list goes on.

If you don’t have a checking account, the odds are good that you don’t have great credit. While a bad credit score doesn’t necessarily mean you’ll be denied for a bank account, the kinds of behaviors that tanked your score can also lead to the rejection of your account application.

When you need quick cash to cover an emergency expense, it can be helpful to have a bank account and a good credit score. They might provide you with a range of loan options to cover your financial needs.

Your options become a lot narrower, however, if you don’t have a bank account; you can’t write a check or withdraw from it. Additionally, you may have limited options when it comes to accessing other emergency financial services, such as a cash advance.

So what happens if you have a financial emergency and you need to take out a bad credit loan? If you need a bad credit loan and don't have a bank account, can you still get much-needed cash?

The short answer is “Yes.” The slightly longer answer is “Yes, but none of the options are good.”

Why is it hard to get a loan with no bank account?

Simply put: it’s hard to get any kind of loan without a bank account because lenders worry that you won’t pay them back. Lenders always worry about being repaid. They’re lenders, it’s what they do.

You might think that a bad credit lender would be less worried about this, but that is not the case. Even though most bad credit lenders don’t check your credit score before issuing a loan (which is why their products are often referred to as “no credit check loans”) they still want some kind of assurance that they’ll be paid back.

Some lenders will use the account information from your application to schedule an automatic debit from your checking account on the date the payment is due. Others simply take a checking account as a sign that the borrower is at least somewhat financially stable, even if they don’t have good credit.

When it comes to loans that need a bank account, you’ll have better luck with a storefront lender than you would with a company that issues online loans. Either way: most bad credit lenders will require some sort of bank account before they issue you a loan.

If you want a bad credit or no credit check loan that doesn’t require an account, you may need to offer something as collateral.

The problem with title loans and pawn shop loans.

The two most common types of bad credit loans that require collateral are title loans and pawn shop loans. Between the two types of loans, title loans are the riskier option. These loans are secured by the title to your vehicle, which means it can be repossessed if you don’t repay the loan.

Title loans are usually short-term loans designed to be repaid in a month or so. The only problem is, that with principals often above $1,000 and annual percentage rates (APRs) that average 300%, you’ll be hard-pressed to pay off your title loan on-time.

Once you start extending or reborrowing your loan, that’s when those high interest rates start to hurt. You can end up paying way more in interest than you paid on your original loan amount, while living under the threat of repossession.

Pawn shop loans, on the other hand, may be less harmful than title loans, but they don’t grant you as much money. Since the items being used as collateral for these loans are usually less valuable than a car (things like jewelry, electronics, or valuable antiques) the principal loan amounts are smaller too.

With a loan from a pawn shop, you’ll still have to pay a high interest rate and risk losing your valuables, some of which might have a far greater sentimental value than the dollar amount, all for a couple hundred bucks at best. If your unexpected expense comes with a bill larger than that, a pawn shop loan probably isn’t going to cut it.

A prepaid debit card works, but it’s still risky.

Some payday and no credit check lenders will allow you to load your loan funds onto a prepaid debit card. They might even provide you with a card as a part of the loan approval process.

This approach has its benefits and drawbacks. It’s certainly a better option than a title loan, as it doesn’t mean using your car as collateral, but you’ll probably be stuck with the same kinds of issues that plague so many payday loan borrowers.

Even with the funds easily accessible via your card, you’ll be stuck paying payday-level interest rates, which can average over 300%! You’ll still have to pay the loan back fairly quickly and probably in a single lump sum.

A payday loan on a prepaid debit card suffers from the same problems as a payday loan in a checking account. The risks of entering a predatory cycle of debt are the same, as are the chances that you’ll owe way more in interest than on the loan principal itself.

The best thing you could do would be to avoid taking out a loan entirely, but sometimes that just isn’t an option. Compared to a title loan, a prepaid debit card is definitely better - but research the lender first and make sure you know exactly what you’re getting yourself into before you sign.

Alternative solutions

Unfortunately, if you have bad credit or no credit history, your personal loan options may be more limited and expensive. If you can show financial institutions significant proof of income, that may be enough to overcome poor credit.

If you don’t have significant income or good credit, you may consider asking for help from a friend or family member while you search for a long-term financial solution. If you do, be sure to work out a written agreement that is comfortable for both parties so the financial relationship does not affect the personal relationship.

Of course, many people do not have a well-off friend or family member to go to for money or a loan. If you are in need of funds, and need to fill out a loan application, shop around for the best loan terms for your situation. You can look at different applications online but it is advisable to not give away any personal information until you confirm the legitimacy of the site.

If you decide to take out an installment loan in lieu of a cash advance, you may be required to set up a direct deposit to a checking account as part of the application process; so, much like getting a credit card, having a bank account could be vital.