There are some payday loan lenders that don't conduct credit checks when assessing an application, which can be suitable for people with negative listings on their credit history.
However, applicants must still meet eligibility requirements and lenders will base their decision based on income, employment and bank statements. Lending to people without knowing their credit history presents a higher risk, so these products may charge higher fees than other loans.
Discover how these loans work and the eligibility requirements as well as the repayments and fees that apply.
Are you struggling financially?
If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support. Find out more here: https://www.finder.com.au/coronavirus-financial-help
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
- For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
- Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
- If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
What does a "no credit check" loan involve?
- The lender will not request a credit report from a credit bureau. When someone applies for a loan, the lender will not request a credit report from any credit bureau to review borrowing history.
- The loan details will be listed on credit reports. While the lender will not check your credit report, it will tell the credit bureau that you applied for a loan. This means that the credit enquiry and the loan (if you're approved) will be listed on your credit report.
- Bank statements will be checked. The lender will use the last three months of banking history to judge whether the applicant can afford the loan. It will consider income, expenses and if the account has been overdrawn to understand the applicant's ability to repay and see if they're under financial stress.
- Applicants must earn an income. Applicants are still required to meet eligibility requirements and demonstrate that they can repay the loan by providing evidence of income including proof of employment, payslips and Centrelink income.
People with a low credit score can also consider bad credit loan options.
The eligibility requirements for a no credit check payday loan
The specific requirements will vary between lenders and products, but the criteria usually include:
- Age. You must be at least 18 years old.
- Income. Applicants must prove that they receive a regular income. If this includes support from Centrelink, they'll need to show that at least 50% of their income is from alternative sources.
- Banking statements. To assess income and expenses, lenders usually require read-only access to at least 90 days of bank statements.
- Liabilities. Applicants must provide details of any other liabilities including outstanding loans or credit card repayments.
As long as the eligibility requirements are met, people can apply for these loans online, though approval is not guaranteed.. If approved, the lender may make the deposit within a matter of days.
Find alternatives to payday loans
What are the risks of no credit check loans?
- Unreputable lenders. Check the lender has a credit licence and is not charging you more than ASIC allows. The lender should be easily contactable.
- Unaffordable repayments. Consider the size of the regular repayments and ensure the loan is able to be repaid during the loan term. If not, extra fees apply to extend it. Be careful, since repayment periods for these kinds of loans tend to be shorter than regular loans.
- Multiple applications. Every loan application shows up on credit reports. While lenders might not consider credit history, several applications within a short period can have a negative impact on your credit score moving forward.
- Check rates and fees. Establishment and monthly fees are capped, so be wary of lenders quoting prices beyond the legal maximum amounts. Be crystal clear on what will be charged for late payments or a default on the loan. The total cost of the loan matters here - lenders can charge interest rates on top of everything else.
- Long-term repercussions and legal issues. Once the loan agreement is signed, the customer is bound to its conditions until the loan and any associated rates and fees have been paid. Typically these loans are unsecured, which means that the lender can initiate legal proceedings against the customer if they can't repay.
How much will the loan cost?
The fees and interest rates associated with a no credit check loan differ from lender to lender. Typically, smaller loans must be repaid within a period of 16 days to 1 year, while larger loans can offer repayment terms of up to 2 years. The fees will vary depending on the size of the loan, which you can compare below:
- Loans of up to $2,000. A maximum establishment fee of 20% of the principal applies to these loans. The ongoing monthly fee is capped at 4% of the loan amount. These loans typically come with minimum terms of 60 days.
- Loans of between $2,001 and $5,000. Medium loans are usually repaid between 16 days and 2 years. Establishment fees are limited to $400 and interest rates are limited to a maximum of 48% p.a.
- Loans of over $5,000. Lenders offering larger personal loans can charge up to 48% annually, including establishment and other fees.
Questions we've been asked about no credit check loans
I receive Centrelink. Can I still apply?
Depending on the lender, a pension or Centrelink can be considered a legitimate income. However, applicants won't usually be approved if the government benefit accounts for more than 50% of their income.
Are no credit check loans guaranteed?
No loan is ever guaranteed. If you see a lender promising guaranteed approval, you shouldn't apply. Legitimate lenders offering loans with no credit checks still need to assess if customers can afford to repay the loan, which is why they consider income, employment, bank statements and other factors before approving a loan.
Besides bank statements and proof of income, what other information do I need to provide?
You should also have the following handy when applying:
- Driver's licence or another form of photo ID
- Medicare number
- Utility bills
Will the lender contact my employer?
In some cases, yes. The lender might need to verify that you are indeed employed and receiving an income, especially since there's no credit check for this loan type. Lenders may also specify on their website that they don't tell employers that you're applying for a loan.
Can I repay my loan early?
Most payday lenders will let you repay your loan early and will not charge you any additional fees.
Are no credit check loans legal?
Yes. If a lender is certain that you won't face financial hardship or struggle to make repayments, there will be no credit checks performed on your account.