About Personal Loans With No Bank Accounts Required

Bank accounts are not usually required to apply for a personal loan. After all, banks are in business to make money by charging interest on loans. Individuals who shop around to find the best interest rates and loan terms can usually save money on their monthly payments. Banks may offer incentives to encourage borrowers to open a bank account when taking out a personal loan, but it is optional.

Significance

A local bank may be more willing to approve an unsecured loan application if the applicant has an established bank account. However, having an account may not matter for those borrowers with excellent credit and reliable income. Borrowers with high credit scores should consider applying at banks that are offering the lowest interest rates, regardless of where the borrower does other banking. Those with poor credit may have to pay higher interest rates but it provides an opportunity to restore their credit.

Features

Those without a bank account may receive a payment coupon book if their personal loan has a fixed monthly payment. The book of coupons serves as a monthly payment reminder. Borrowers can mail a coupon with the monthly payment or drop it at the bank in person. Those choosing variable interest rates will usually receive a monthly payment reminder with the amount owed. This is necessary because the payment amount may change.

Considerations

Banks may offer borrowers incentives such as lower interest rates if they are willing to open a bank account and allow the bank to set up automatic payments each month from the account. Most Internet banks making quick decisions about personal loans offer to direct deposit the money into the borrowers account. A borrower without an account may have to wait for a check to arrive, or pay wire transfer fees.

Benefits

Automatic account debiting can make monthly payments more convenient for the borrower. However, some borrowers prefer having their personal loans at banks where they do not have other accounts to increase their privacy. There are banks willing to loan money to borrowers with poor credit who do not have a bank account. While these loans will give borrowers an opportunity to restore their credit, they also charge higher interest rates.

Warning

Borrowers taking out unsecured personal loans pay interest rates 2 to 3 times the rates paid on secured loans. Those borrowers without a bank account and poor credit can expect to pay even more. A borrower, who fails to make monthly payments as agreed, will have the collateral repossessed by the bank if the loan was secured. Banks notify the credit bureaus when a borrower defaults which lowers future credit ratings. Those with a bank account may have it involuntarily closed by the bank as well. Personal loans not secured by a home are not income tax-deductible whether the borrower has a bank account or not.

Resources

• Money Central Personal Loan Rates
• What Are Personal Loans
• Bank Rates