How to Get a Loan Without a Bank Account

Getting a loan may be difficult, but not impossible, if you don't have a bank account. PM Images/Getty Images

These days, having a bank account is about as common as carrying a driver's license -- it's something most people have. But "most people" doesn't mean "everyone." Maybe, due to financial difficulties or bad luck, you wrote one too many bad checks and ended up listed in ChexSystems, a service that banks check before opening an account for someone. Or, perhaps, you're starting over after a divorce or big move and you haven't yet found a new financial institution. Whatever your reasons, not having a bank account can be a liability. You probably already know that. What you may not know is how to manage without the ubiquitous, all-powerful bank account -- especially when it comes to loans.

While having a bank account may seem like a logical prerequisite to taking out a loan, it's not always necessary. We'll provide you with a couple examples of loans that don't require bank accounts, as well as the benefits and dangers of each. Keep reading to find out more.

Payday Loans without a Bank Account

Not to make too many assumptions here, but if you don't have a bank account, you also might not have a lot of accumulated wealth right now. That can mean possible money meltdowns around every corner. There's no shame in being in such a situation -- living paycheck to paycheck happens to many of us, especially in uncertain economic times. Institutions known as payday lenders offer temporary solutions to financial fixes. These lenders provide quick loans with no credit check and require very little collateral (usually just proof of income over a certain amount like, say, $1,000 a month).

Many payday lenders also require you to have a bank account because it's an easy way for them to verify that you have a regular income, and so they can draft the repayment funds when they're due. However, not all of them refuse clients without bank accounts. If you don't have one, they will probably require much more information from you in order to verify your income. And they may also charge you higher fees than they do their other customers. The best way to find out whether a payday lender will offer you a loan without a bank account is to call those in your area and ask.

While a payday loan may get you out of a jam, try to look for other options before taking one out. The repayment terms and interest rates on these loans are usually quite steep.

On the next page, you'll learn about another kind of loan available to those without bank accounts.

Auto Loans without a Bank Account

Check with the car dealership to see if you need a bank account to get a loan.
Check with the car dealership to see if you need a bank account to get a loan.
Comstock Images/Getty Images

Unlike payday loans, which are kind of like pay advances, automobile loans seem like a pretty big deal. It means you're taking out money for something that costs thousands of dollars. So, surely, you'd never be able to take out such a loan without a bank account, right? Checking with local car dealerships may paint a different picture. According to the pros, the most important requirement for taking out a car loan is proof of income. And while a bank account isn't unimportant, taking out a car loan isn't contingent on having one. After all, the automobile itself provides collateral. If the loan isn't being repaid, the lender may repossess it. So, the deal doesn't necessarily hinge on what may or may not be in your bank account -- or whether you have a bank account at all.

Now, let's face it: If you don't have a bank account, you might not have good credit either, which makes you a subprime borrower. We know, it's not a desirable term -- but it's really just between you and your lender. Just know this: As a subprime borrower, your interest rates will probably be much higher than they are for borrowers with more desirable credit ratings. The plus side is that by making on-time payments, you can use your auto loan to help rebuild your credit.

Having bad credit and seeking out unconventional loans may make you vulnerable to scams. Continue reading to make sure you don't wind up a victim of financial fraud.

Avoiding Loan Scams

You may not know it, but if you don't have a bank account, you might have a huge target on your back. At least, you do if you're seeking fast cash or high-interest loans. There are many reputable businesses out there for people without bank accounts to do business with. But there are just as many who prey on the financially vulnerable. So, how do you avoid getting ripped off?

Let's start with payday loans. Many payday lenders are legitimate businesses. However, because of their high fees, they're sometimes looked down upon as taking advantage of those who are desperate. Consumer advocate and radio personality Clark Howard regularly rails against the payday lending industry, citing the fact that their fees are often equivalent to 300 percent to 700 percent interest rates. Most U.S. states have laws governing the fees and rates payday lenders can charge, but not all do. So, it's best to avoid having to pay these high rates if at all possible.

When it comes to auto loans, disreputable lenders could tell you that you qualify for an interest rate much higher than what your credit calls for. Car dealerships are allowed to mark up their interest rates because they're doing you a service by arranging the loan for you, but some go too far. There are a couple of things you can do to help prevent this from happening to you. First of all, try to deal with established car dealers and financial institutions whenever possible. Secondly, do a little research into your likely interest rate beforehand. You can do this by trying to prequalify for loans with a few other lenders. The figures you get should help you determine the general range your interest rate should fall in.

So if you're without a bank account, don't worry: You have options. Just make sure being the victim of a scam isn't one of them.

Last editorial update on Oct 3, 2018 05:08:13 pm.

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Sources

  • Clarke, Warren. "Auto Finance Tips: Tips for Subprime Borrowers." Edmunds.com. (July 8, 2010)http://www.edmunds.com/advice/finance/articles/48242/article.html
  • ClarkHoward.com. "The military takes on car dealers over bad loans for soldiers." May 13, 2010. (July 8, 2010)http://clarkhoward.com/liveweb/shownotes/2010/05/13/18397/
  • ClarkHoward.com. Payday lenders charge up to 1,400% interest." June 27, 2008. (July 8, 2010)http://clarkhoward.com/liveweb/shownotes/2008/06/27/13715/
  • ConsumerBadCreditGuide.com. "Personal Loan For Bad Credit Repair With No Bank Account." (July 8, 2010)http://www.consumerbadcreditguide.com/personalloanbadcreditrepairnobankaccount.html
  • National Conference of State Legislatures. "Payday Lending." January 22, 2010. (July 8, 2010)http://www.ncsl.org/default.aspx?tabid=12473
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  • PowerPaydayLoan.com. "How Do You Get a Payday Loan with No Bank Account?" (July 8, 2010)http://www.powerpaydayloan.com/bank-account-loan.aspx