For customers lacking access to traditional banking services, obtaining access to credit can be a daunting process. Banks are considered the default option for obtaining loans, and alternatives are not always readily visible. Nevertheless, anyone without a bank account can receive a small loan if they look in the right places.
It’s important to understand how the presence of a bank account affects the way you are viewed by creditors. In its guide to credit reports, the Federal Reserve tells consumers that a credit report lists your payment history and outstanding financial obligations, but your bank account is not listed. Typically, bank account information is only reported to an agency called ChexSystems when it is overdrawn and not repaid. As a result, lending decisions may not be affected by a lack of a bank account through traditional channels.
Some pawn shops give loans against personal property that’s held as collateral. Since the loan is based on the value of the goods used to secure the loan, there are typically no credit checks, and approval decisions are made quickly. For example, the AllPawn pawn shop will make loans for as little as $5, and approves loans in five minutes. The only requirement is that the goods used for collateral are of suitable value for the loan.
Some cash advance centers give loans with automobiles used as collateral. Since there is collateral used, car loans can have lower interest rates than payday loans, and no bank account is needed. For example, Ace Cash Express makes car loans up to $2,500 against cars, and approval decisions are made in less than 48 hours.
Credit cards are another option for receiving a small loan. If the money is needed for a purchase, then the card can be used instead of cash if the merchant accepts them. If the money is needed as a check or cash, you can get a cash advance off of the card. Cash advances are not always available with credit cards, and the cash advance limit is often less than the total limit of the card. Interest rates on cash advances are usually higher than regular purchases.