When you need to borrow money quickly, easy-approval loans can be an attractive option. Many of the easiest loans to get don’t require a credit check, have minimal requirements, and offer quick funding.
While these emergency loans can be a simple go-to for unexpected expenses, there are some downsides. They often come with high interest rates and have short repayment terms. Understanding the risks and exploring alternatives can help you make an informed borrowing decision.
Key Takeaways
- Easy-approval loans offer fast access to cash with minimal approval requirements but often have high interest rates and fees.
- Borrowing limits vary by loan type and affect your options.
- Compare the cost of alternatives like banks, credit unions, and online lenders to choose the best option.
Payday Loans
Payday loans are short-term loans that must be repaid by your next payday. They typically don’t require a credit check, making them easy to qualify for, and they offer instant or same-day approvals. Loan amounts are low—typically in amounts of $500 or less. To guarantee repayment, borrowers provide a postdated check or authorize an automatic withdrawal when your paycheck or monthly government benefits deposit arrives.
There are no universal laws that define payday loans, according to the Consumer Financial Protection Bureau (CFPB). State laws vary, but many payday lenders operate online to get around strict regulations.
Payday loans generally come with extremely high APRs, often exceeding 400%. Because payday loans are due in one lump sum, many borrowers struggle with repayment and fall into a debt cycle.
Using rollover or renewal options allows you to extend your loan for an additional fee. However, this can quickly lead to a cycle of debt.
No-Credit-Check Loans
No-credit-check loans are designed for individuals with bad or no credit history who may not qualify for traditional personal loans. Loan amounts vary depending on the lender and your income.
While these loans offer easy approval because there’s often no minimum credit score, they come with high interest rates, sometimes as high as 195%. Some no-credit-check loans have origination fees, late payment penalties, or prepayment fees, which adds to your borrowing cost.
These loans have short repayment terms, which can make them difficult to manage. Because of the high interest rate and fees, no-credit-check loans carry a potential for predatory lending practices. On the plus side, you can repay these loans with fixed monthly payments, which makes it easier to budget for.
Unsecured Personal Loans
Unsecured personal loans don’t require collateral but require individuals to have fair credit, generally between 580 and 669 to qualify. Loan amounts often range from about $1,000 to $50,000, but the exact range will depend on lender. Some have higher interest rates and may carry origination fees, while others may have no fees and competitive interest rates.
Borrowers with higher credit scores can qualify for a better interest rate, while those with lower credit scores may only qualify for high-interest-rate loans. Personal loans have fixed monthly payments, which makes them easier to manage compared to loans with short repayment terms.
For instance, OneMain Financial offers loans with rates up to 35.99% and origination fees up to 10%.
Retirement Plan Loans
Retirement plan loans allow you to borrow up to 50% or $50,000 from your vested 401(k) or other retirement account without a credit check. Interest rates are typically lower than personal loans or credit cards. Many employers allow you to repay your loan through automatic payroll deductions.
You typically have five years to repay a 401(k) or other retirement loan, unless you’re using the loan to purchase a primary residence. If you leave your job, you may have to repay the loan in full or risk having the loan taxed as a withdrawal.
Note
Borrowing from your retirement savings can reduce your long-term savings and investment growth.
Pawnshop Loans
Pawnshop loans allow you to borrow money by using personal valuables—like jewelry or electronics—as collateral. Approval is instant and there’s no credit check required. Loans are based on the value of your pawned item, but you can only borrow a portion of the item’s resale value.
You typically have 30 to 90 days to repay the loan, depending on your state law. If you repay the loan on time, you get your item back. However, if you don’t repay, the pawnshop keeps your item and resells it.
There’s no credit check required for a pawnshop loan, which makes approval easier. However, a major drawback is the potential for high APRs, sometimes as high as 300%.
Alternatives to Easy-Approval Loans
Before opting for an easy-approval loan, consider a few alternatives:
- Banks and credit unions: Some financial institutions offer personal loans or short-term borrowing options with better terms. If you have an existing relationship with a bank or credit union, that’s a good place to start.
- Borrowing from family or friends: A trusted family member or friends may be willing to lend money to you, with minimal or no interest or fees. Repayment terms are more flexible, but it’s important to be clear to avoid conflicts. To avoid misunderstandings, put the loan terms in writing.
- Credit cards: You may be able to tap into an existing credit limit, by using your credit card for a purchase or taking a cash advance. Cash advances do come with a 3% to 5% fee and interest starts accruing immediately. The interest rate for cash advances is generally higher than for purchases, but still less expensive than payday loans.
- Online lenders: Many online lenders have more flexible lending requirements compared to traditional loans and they allow borrowers to pre-qualify. This makes these loans a good option if you don’t have the best credit. The application process is straightforward and you can often receive a quick decision on your loan application.
- Payment Plans: Some businesses, like medical providers or utility companies, offer payment plans instead of requiring you to pay upfront. Payment plans may be offered through third-party lenders or card issuers, so be sure to ask about the application.
The Bottom Line
Easy-approval loans provide quick access to cash but have risks and high costs. However, be aware that they can trap you in cycles of debt. Before choosing one of these options, consider loan alternatives with lower costs and less risk.
