Financing is a core part of everyday purchasing and borrowing. But if you don’t have great credit, it can be tough to get a loan or credit card or make an emergency purchase when needed.
In a pinch, you might consider no credit needed financing on select items. No credit needed financing or progressive leasing can be advantageous, but it also comes with serious risks. Let’s break down whether no credit needed purchasing or loans are safe to use.
What Does No Credit Needed Mean?
In a nutshell, “no credit needed” means that a financier or lender does not necessarily look at a borrower or applicant’s credit score, social security number, or credit history when determining a financing decision. For instance, a no credit needed loan provider may look at alternative financial attributes when deciding whether to give a loan to a borrower.
No credit needed financing and prog leasing are oftentimes excellent choices for individuals with low or no credit scores. That said, no credit needed financing is not always the best option, nor does it mean that a borrower won’t make a credit check. It’s best to know about the risks.
In many cases, no credit needed lenders or other organizations will still check an applicant’s credit. They just may decide to approve them for a loan or credit card even if their credit score is not great (or doesn’t exist yet).
No credit needed financing can be used for loans, credit cards, and lease contracts, like the lease-to-own contracts we offer at Becca’s Home.
Is There Interest on No Credit Needed Purchases?
Most of the time, yes. No credit needed purchases don’t mean that a purchase is exempt from most standard lending practices, such as the implementation of late fees or APRs. Interest ensures that lenders make a profit from giving out loans or lines of credit to borrowers.
Indeed, many “no credit needed” loans, like payday loans, have very high or exorbitant interest rates. These are oftentimes in excess of 100%. Therefore, borrowers should be careful when seeking out no credit needed financing. Such financing deals are sometimes presented in ways to attract at-risk individuals.
What Does APR Mean?
APR means annual percentage rate. This is the total interest charged for borrowing or using a line of credit and it represents the complete yearly cost for the loan/line of credit in a percentage.
Alternatively, you can think of APR as the annual rate of interest paid for loans or investments without accounting for compound interest in the same year.
High APRs mean that you’ll pay more money to borrow or use a line of credit. Low APRs are more affordable but are most often found for loans or credit cards that do check credit for creditworthiness.
No Credit Needed: The Pros
There are some advantages to no credit needed financing; here’s a breakdown of each one in detail.
No Credit Needed Means Access to Bigger Purchases
For those with low credit scores, the only available credit card might be a secured card that requires a security deposit as collateral. These cards, such as the Capital One Secured Mastercard, typically offer low credit limits, making financing difficult. Luckily, you don’t need credit for no credit needed financing.
Since no credit needed financing and installment loans are usually quick and easy, you can make a fast purchase or pay for emergencies without having to wait for a traditional loan’s lengthy approval process. Having an emergency purchase option is highly important for many people.
As with all lines of credit or loans, no credit needed financing expands your buying power. It may enable you to start a business, repair your car, or simply wrap up your holiday shopping without having to skip a family member. It also lets you pay for things at a retailer’s cash price without having to hunt for a discount elsewhere.
Financing Can Help You Stick to Your Budget
In addition, financing larger purchases may help you stick to your budget without going overboard. Say that you need to pay for car repairs and they cost $1000 in total. With financing, you can pay for the car repairs upfront, then make a small $100 or so payment each month until the total cost of the repairs is paid off. In this way, your budget isn’t impacted by a massive $1000 purchase on one day.
No Credit Needed: The Cons
However, there are some downsides to leveraging no credit needed financing you should be aware of.
Some No Credit Needed Purchases Have High Interest Rates
For instance, many no credit needed purchases or loans come with higher interest rates. The typical example of this is a payday loan. Payday loans lend you money for a short timeframe, usually a week or less, and need to be repaid when you get your next paycheck.
Unfortunately, many payday loans have very high interest rates, such as 200% or even 300%. So you have to pay back much more than what you initially borrowed come payday. Be wary when using no credit needed financing to make big purchases or when taking out personal loans meant for folks with bad credit.
A no credit needed purchase agreement or loan could also come with other downsides, like an annual fee.
Missing Payments Can Affect Your Credit Score
In addition, missing payments for no credit needed financing can significantly hurt your credit report. Say that you miss a single loan payment for a payday loan; that information will be reported to the credit bureaus. Even worse, no credit needed financing with high interest rates may cause the credit bureaus to think you owe more money than you initially borrowed.
Some Companies Make It Easy To Overspend
On top of all that, lots of no credit needed financing providers make it very easy for you to overspend. They offer attractive application processes and fast financing, hoping you won’t look at the fine print or details. Bottom line: always be careful when using no credit needed financing to avoid being tricked or taken advantage of.
In addition, no credit needed financing isn’t available from certain lenders in specific locations. Some common states that have limited access to no credit needed financing include:
- Wisconsin (WI)
- New Jersey (NJ)
- Vermont (VT)
- Minnesota (MN)
- Wyoming (WY)
What’s the Best Way To Finance Big Purchases?
Overall, the best way to finance big purchases like appliances or electronics is to use safe loans you qualify for. Alternatively, you can use lease-to-own agreements from trusted providers, like Becca’s Home.
Becca’s Home’s lease-to-own option, rather than having you borrow money from a lender, has you sign a standard agreement. You then lease your chosen merchandise, like high-quality furniture, from us. Becca’s Home continues to own the merchandise until you make all of your standard lease payments or utilize our early payoff option.
Thanks to multiple payment options after your initial payment, you can still finance a big purchase without having to worry about exorbitant interest rates or unnecessary fees.
Becca’s Home is a no credit needed organization. However, we don’t charge high-interest rates or try to trick you. We just don’t look at your credit score or the types of credit available when you want to lease furniture from us. We look at other factors instead, like your saved cash in an active checking account or monthly income.
How Becca’s Home Can Help You Build Credit
Even better, Becca’s Home may help you build credit if you make your standard lease payments on time. Much like making mortgage lease payments on time shows that you are responsible with your money, making regular lease payments toward leased furniture from Becca’s Home also looks great to the big credit bureaus. Our flexible payment options and easy application process make it simple to get the furniture you need ASAP.
Becca’s Home reports to the credit bureaus Experian, Equifax, and TransUnion regularly. When you lease furniture from us and make payments on time and in the right amounts, we’ll report that positive information regularly and your credit score will increase in no time.
Rising to good credit scores is important since they net you a higher credit line/credit limit for your cards, give you access to better credit card accounts, and more.
Financing Furniture Without High Interest
When you need furniture fast without breaking the bank, Becca’s Home is the best choice. That’s because we don’t charge high-interest rates for our leases.
Since you don’t have to worry about high interest, you won’t pay much more for your furniture overall if you stick with the standard 17-month payment timeframe. If you come into some extra cash, you can also finish purchasing your furniture early and avoid future interest payments at any point!
Summing Things Up
All in all, no credit needed financing can be useful, but some options are better than others. You should generally stay away from no credit needed loans or credit cards, as these frequently come with expensive strings attached.
Try to choose no credit needed financing with lease-to-own options, like financing furniture through Becca’s Home. When you buy furniture from us, we don’t use your credit score and you don’t use borrowed money to make the purchase.
Instead, we keep ownership of your chosen furniture while you make regular, affordable monthly payments, just like a standard lease agreement. It’s a smarter, easier way to get the perfect furniture for your home or apartment on your budget. Check it out today!
Sources:
What Is A No-Credit-Check Loan? | Bankrate
Credit Reports and Scores | USAGov
What is a payday loan? | Consumer Financial Protection Bureau
