No Credit Check Secured Loan

If you’re in need of some serious money, then taking out a secured loan may be your best option. But what if you’ve got a poor credit score or a thin credit file? Does this mean you can’t take out a secured loan, or is there still hope out there for you?

Luckily, we’ve got all the answers. So, if you want to learn all about a no credit check secured loan, keep reading!

What this article covers:

Can You Take Out a Secured Loan With No Credit Check?

no credit check secured loan

Absolutely. As long as the lender accepts your asset as collateral, you can borrow a significant sum of money without undergoing a credit check. 

And if you repay your loan fully and make your payments on time, your asset will remain safe and untouched until the deal is done. However, if you fail to do so, the lender will sell your asset in the hopes of getting back his money. 

Want to know how all this happens? Well, let’s take it from the top, shall we? 

What Is a Secured Loan?

Quite simply, a secured loan is when you’re able to borrow a sum of money in exchange for putting a valuable asset as collateral. That way, if you fail to repay the entirety of the loan, the lenders will have a way to get back all or at least part of their money. 

Sounds risky, doesn’t it? So, why do people still get secured loans?

Well, a secured loan gives you a certain amount of flexibility over your loan terms. To elucidate, if the lender has some form of security, he may allow you to borrow a large amount of money. He may also allow you to pay back the money over a longer-than-average period.

Most importantly, he’ll lend you money even if you have bad credit. And if your asset is valuable enough to cover the entirety of the loan, you can take out a no credit check loan so that the lender won’t have to check your score.

Accordingly, if you’ve got a huge upcoming expense that you need to finance, a secured loan will be your best option. With it, you’ll finally be able to purchase the car of your dreams or fix up your home. 

Once you’ve fully repaid your loan and its interest, you’ll be able to recover your valued possession.

can you get a secured loan with bad credit

What Happens If You Fail to Repay a Secured Loan?

If you’ve been missing your payments, the lender will send you a warning. This warning will notify you that you need to pay up, or else the lender will seize your asset and sell it. Essentially, the lender is giving you the final opportunity to honour your initial agreement and repay your debt without any unpleasantness.

Now, it’s best to try and avoid this situation altogether. Once you discover that you won’t be able to comply with the loans of your term, you should contact the lender and try to explain your situation. 

There’s a chance the lender will be sympathetic and allow you to refinance your loan, which can be through giving more favourable loan terms. For instance, the lender may decrease the monthly repayment value or give you more time to repay your debt. Lenders might also consider debt negotiation in order to help you repay the loan.  

Still, not all lenders are sympathetic. Some will simply seize your asset after a reasonable amount of time has passed since the warning. After that, they can do whatever they like with it. They may keep it or, more often than not, may sell it and use the proceeds to cover the loan money. 

So, if you’re particularly attached to your asset, you need to think carefully and calculate your steps before taking out a secured loan. Budget carefully and make a plan. Make sure you’ll be able to repay the loan in full. If you don’t, not only will you lose your asset, but you’ll also end up acquiring more bad credit. 

What Asset Can I Use as Security Against My Loan?

no credit check secured loans

In a nutshell, you can use anything with value as a security against your loan. 

Most money lenders will accept assets like cars, motorbikes, boats, and caravans. You can also use your house as collateral as well as expensive jewellery. A few lenders also accept shares and cash in saving accounts. 

Occasionally, some lenders will stipulate a certain asset depending on what you’ll be using the money for. For example, if you’re using the loan money for a mortgage on a new house, then they’ll ask for the house to serve as collateral. But don’t worry; this doesn’t happen with all money lenders. 

How Much Can You Borrow With a Secured Loan?

As a general rule of thumb, you can borrow as much as your collateral, i.e., your collateral needs to be worth as much as the loan or more. 

So, let’s say you want to take out a loan for $10,000, and your collateral is only worth $5000.

In such a case, you’ll need to offer one or more collateral to make up for the other $5000. But what if you don’t have other valuable assets? In that case, you have no option but to take out a $5000 loan and make do. 

Benefits of a Secured Loan

Here are some of the most important advantages of a secured loan:

  1. High Chance of Approval: Since the loan isn’t so risky to the lender if he has some form of security, you’ll almost always be approved for the loan, and it won’t take long for the approval to arrive. And, yes, this also applies to people with bad credit.
  2. Low-Interest Rates: Again, the lower the risk, the more lenient the lender can be. That’s why secured loans tend to have low-interest rates. 
  3. Large Loan Amount Available: The more expensive your asset, the more money you can borrow. So, as long as you’ve got a valuable item, you can borrow as much money as you need. 
  4. Long Repayment Terms: Typically, lenders give short repayment periods because they’re afraid the borrowers can flee at any second. However, if they’ve got their hands on collateral, they’re more willing to give you a longer repayment period (can go up to 5 years or more). 
  5. Flexibility: Unlike certain types of loans, you can use a secured loan to buy anything you want. Whether you want to buy a car, buy stocks, or pay your student loans, you’ll be free to spend your loan money as you desire. 

secured loan no credit check

Drawbacks of a Secured Loan

While secured loans come with a lot of benefits, they also have their share of drawbacks.

  1. Risk of Losing Asset: The biggest disadvantage of a secured loan is the chance of losing your asset if you default. You may lose an item that’s irreplaceable to you, be it for its monetary or sentimental value. But that’s not even the worst-case scenario. Say you’ve put up your house as collateral, and you default. In such a situation, you’ll be out on the streets with nowhere to go. So, always think carefully about what type of asset you’ll risk before taking out a secured loan.
  2. Long Repayment Term: While this is seen as an advantage by some, a long repayment term also means more interest. With each month that goes by, the interest will accumulate. As such, you’ll pay much more than you originally borrowed. 
  3. Asset Value Limit: As previously mentioned, you’ll only be able to borrow as much as your asset is worth.
  4. Long to Process: Before a lender approves your loan, he needs to evaluate your asset and make sure everything is in order. For instance, is the asset actually yours, or is it someone else’s? Is it worth as much as you say it is, or are you lying? The lender has to know the answers to these questions before accepting your loan application. 

Secured Loans vs Unsecured Loans

If the possibility of losing your asset scares you, then you’re better off getting an unsecured loan. 

As the name implies, unsecured loans don’t require the borrower to offer his asset as collateral. So, even if you can’t repay your loan in full, the lender won’t be able to do something about it. 

That sounds like a sweet deal, right? Well, as they say, every rose has its thorns. 

Since unsecured loans are so risky to lenders, they usually come with less-than-favourable terms for the borrower. For example, you’ll only be able to borrow small amounts with an unsecured loan. The loans will also come with a short repayment time and high fees or interest rates. That’s especially true if you’ve got bad credit. 

So, when thinking about getting a secured or unsecured loan, you need to weigh the pros and cons. Choose the loan that better suits your needs and capabilities, and make sure to have a plan for repayment.  

Does a Secured Loan Affect Your Credit Score?

Yes, but it can go both ways. 

When you take out a secured loan, the lenders will add a record of the deed to your credit file. Now, initially, this may slightly reduce your credit score. However, if you consistently make your payments on time and manage to repay your debt by the specified date, your credit score will go up. 

secured loans no credit check

This paves the way to getting better loan terms in the future, enabling you to borrow large sums with lower interest rates.

Of course, if you default on your loan or if you’re frequently behind on your payments, this will also be reported to the credit bureau, and your credit score will take a big hit.

How to Apply for a Secured Loan

There are two ways you can get a secured loan; you either go to a bank or a private money lender. 

On the one hand, a bank will check your credit score before giving you any loans. You’ll also be asked to provide lots of documents, which means that the process will generally take longer. Not only that, but you also won’t be able to negotiate your loan terms with banks. You either accept their terms or not. 

As such, many people prefer to go to private money lenders. They’re quicker, more flexible, and, most importantly, willing to work with people with bad credit. Most direct lenders won’t even check your credit at all as long as you provide acceptable collateral. 

Now, there are two ways you can approach a money lender. The traditional way is to meet directly with the lender and ask for a loan. The easier way is to use a loan website like Orange Loans. 

Such websites will get you in touch with trusted lenders and relay your needs to them, all through filling out an application.

In this application, you’ll usually be asked to list information like your personal data, employment details, financial details, as well as the 90-day history of your transactions. You’ll also be asked to specify how much money you want and your preferred loan terms. 

When the lender sees your application, he’ll call you to confirm your details. If everything checks out, he’ll send you the contact for the loan. Once you sign, you’ll get the loan money in a matter of hours, though it can take longer for large sums.

It’s worth noting that you always have a chance of receiving a rejection. This is because ASIC prohibits guaranteed no credit check loans and obligates lenders to assess the borrowers’ financial situations first.

no credit check secured

It’ll come down to the lender. 

If he finds that your Centrelink benefits will enable you to repay your loan comfortably, then he’ll most likely accept your application. However, if your Centrelink payments aren’t deemed enough to cover the principal and the interest, you’ll be rejected. 

Still, not all lenders think the same. Some will flat-out refuse you if you receive Centrelink payments. Some will take the chance, particularly when you have a valuable asset to offer as collateral. 

As long as the lender doesn’t specify his stance on Centrelink payments in his eligibility criteria, you won’t know what’ll happen till you apply.  

What Are the Eligibility Criteria for a No Credit Check Secured Loan?

Secured loans or otherwise, the eligibility criteria among money lenders in Australia are pretty much the same. 

In general, you need to:

  • Be over 18 years of age
  • Be an Australian citizen or a permanent resident of Australia
  • Have an active bank account, email, and phone number
  • Have earned a regular income for at least the previous three months (at least $30,000 per year)

What Type of Loan Should You Choose for Small Sums?

If you’re looking to borrow a sum under $2000 without undergoing a credit check, here are a few options you should consider.

Personal Loan

No credit check personal loans are usually permitted for small sums, be they secured or unsecured. 

Now, it’s always better to go with a secured personal loan because of the lower costs. However, if you can’t, then don’t worry too much about it. 

Loans up to $2000 that are repaid in 16 days to one year are regulated by the

Australian Securities & Investments Commission (ASIC). This commission states that for such a small loan, the lenders can’t charge more than 4% of the loan as a monthly fee and more than 20% as an establishment fee.

So, if you took out a loan for $1000 no credit check loan to be rapid in a month, you’ll only pay the following:

  • Establishment fee: $200
  • Monthly fees: $80
  • Total: $1280.00
  • Payment on a fortnightly basis: $256 (x5)

Still, keep in mind that there’s such a thing as late payment fees, which can reach $7 per day. There are also default fees, which can be twice as much as your original loan. 

However, there aren’t any interest rates, so it’s not all bad. And, in most cases, you won’t need to undergo a credit check, especially if you’ve got an asset as security.

personal loan

Payday Loan

Payday loans, previously known as small-amount loans, are meant to be paid back by the time your upcoming payday comes. They can be as small as $300 loans up to $1500. However, they’re a bit different from personal loans. 

First off, payday loans come with higher fees than personal loans, which is why they’re generally easier to acquire. On the flip side, they’re usually not reported to credit bureaus. This means they won’t affect your credit score, even if you take out multiple loans in a short period. 

While this might seem like a bonus point, it takes away your chance to better your credit score when you make your payments on time. 

So, when choosing between personal and payday loans, think about what your end goal is and choose accordingly. 

No-Interest Loan 

If the fees of personal loans are too much for you, then a no-interest loan may be a better option. 

This type of loan comes with no interest, no credit checks, and, best of all, no fees or hidden charges. You pay back what you borrowed over 12-18 months, and that’s it. 

How can that be possible? This is thanks to the “No Interest Loans Scheme” in Australia. 

With it, people can borrow up to $1500 to use for essential purchases, such as household items, educational materials, medical/dental services, and car repairs. 

However, not all people qualify for such a loan. To get a no-interest loan, you need to have lived in the same address for at least three months and either:

  • Have a Health Care Card
  • Have a Pensioner Concession Card 
  • Make an income of $45,000 per year after tax 

If you don’t qualify or if you’ll be using the money for non-essential purchases, like holiday expenses, then the no-interest loan isn’t for you. Instead, you should look for a no credit check holiday loan.

Centrelink Advance Payment

If you receive Centrelink benefits, you can get an advance on your payment by applying for it on the Service Australia website. 

Thankfully, this method doesn’t come with interest or fees, and most people who receive Centrelink payments can apply.

FAQs

Is the Interest Rate on a No Credit Check Secured Loan High?

secured personal

Generally, people with a bad or non-existent credit score will receive a higher interest rate than people with excellent credit. It’s part of the risk management strategy. As such, if you’re looking for a no credit check loan, assume you’ll be getting a higher-than-average interest rate. 

What Should You Do If You’re Having Trouble Repaying Your Loan?

The first thing you should do is contact the lender at least 24 hours before your payment is due. Explain with all honesty the reason for your predicament and ask if they can modify your repayment plan. That way, you can avoid late payment charges and the loss of your asset. 

How Long Does It Take to Get Approved for a Secured Loan?

It varies, but the process usually takes 2-3 days. This is enough time for the lender to review your application, check your asset, and get the money ready. 

How Much is the Average Secured Loan?

No credit check secured loans can range from $5000 to $25,000. However, depending on how valuable your asset is, the numbers can go lower or higher.

What Can a Secured Loan Help You With?

Using the money from a secured loan, you can free up cash for purchases or investments. This money can also help you consolidate your debt or refinance another loan. Most importantly, a secured loan can help you better your credit score in the long run. 

secured loan instant payout

Conclusion 

No credit check secured loans are thankfully not that hard to get. You just need to find a trusted money lender or online lending service and apply. 

To get the money, you’ll need to offer collateral that’s worth as much as the loan. That’s so the lender has a way to get his money back in case you default on the loan. 

As long as you make your payments on time, the lender will have no reason to touch your asset. 

Nevertheless, remember that taking out a secured loan may impact your credit score. And finally, know that no credit check secured loans tend to have higher interest than standard secured loans.

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