Can You Get a Personal Loan Without a Bank Account?

If you are thinking about taking out a personal loan, you might be wondering whether you can get a personal loan without a bank. This post provides with you everything you need to know about getting a personal loan without a bank account?

Can You Get a Personal Loan Without a Bank Account?

Although you can get a personal loan without a bank account, many banks will be unwilling to lend you money without having a checking account as most lenders require them to deposit personal funds and verify your ability to repay the money you’re seeking to borrow.

Millions of Americans do not have an open deposit account, such as checking or savings accounts with banks or credit unions.

This is bad news if you’re applying for a personal loan for two main reasons.

First, personal loan lenders like to see that you have an open deposit account such as a checking account so that they can verify your income from account statements. If you don’t have a checking account, you will not be able to verify your income via bank statements.

Second, personal loan lenders often require borrowers to have a bank account because that is where they will deposit the funds. Without a checking or savings account, there is no account into which they can deposit the funds.

As such, most personal loan lenders will not be willing to work with someone who does not have a deposit account.

The solution to this problem would be to open a deposit account with a bank, leave the account open for a few months to build some history behind the account, and only then apply for a personal loan.

Opening a checking or savings account is easier than ever before even for persons who have bad credit. This is so because most banks don’t check your credit when opening a deposit account. So, open a bank account, and then apply for a personal loan.

Having a bank account will make it significantly easier to obtain an unsecured personal loan because lenders will be able to verify your income via bank statements and have an account that they can deposit your funds into.

How to Get a Personal Loan Without a Bank Account?

If you don’t have a bank account, it will be difficult to obtain a personal loan from major banks and financial institutions, leaving you with the option of going with a subprime lender that is likely going to charge you a very high interest rate and fees. If you don’t have a bank account, you’re better off opening a bank account and having the funds deposited into your account. Doing this will save you a ton of money in the long run on interest and loan fees.

If there is something preventing you from opening a checking account, such as negative information in your ChexSystems report, you should consider applying for a second chance deposit account. These accounts are for persons who’ve mishandled checking or savings accounts in the past.

Also, you should check your ChexSystems report, which is like a credit report but for deposit accounts, such as checking and savings accounts. It contains information about how you’ve handled deposit accounts in the past. If you find negative information in your ChexSystems report, you should take action to remedy the negative items. Once you’ve addressed the negative items, try applying for a regular checking account.

If you’re willing to pay a high interest rate and additional fees, you can still get a loan without opening a bank account by pursuing a payday loan or auto title loan. However, oftentimes these loans are secured, meaning the lender will require you to post collateral in exchange for the funds.

If you don’t pay back the money that you’ve borrowed, the lender can take the collateral and sell it to recover the money that you failed to pay back.

Such loans should be used as a last resort because you could lose your property if you fail to repay them on time.

Consider Open a Checking Account With a Credit Union

The best thing to do if you don’t have a bank account is to look at your local credit unions and open a checking account. Credit unions are willing to accommodate individuals who have less than ideal deposit account history. Credit Union checking accounts are regular checking accounts that you can use to obtain a personal loan. You should also conduct a quick search for a second chance checking accounts that are marketed to persons who’ve mishandled deposit accounts. They are significantly easier to be approved for than bank accounts with the major banks.

After you’ve opened a checking account, search for online lenders. There are a ton of reputable online lenders that may be willing to lend you money.

A quick internet search provided the following financial institutions that offer online personal loans, here are some of them:

  1. SoFi Loans
  2. Credible
  3. Upstart
  4. Rocket Loans
  5. Wells Fargo

Some of these financial institutions will allow you to check your rates so that you know the interest rate and fees you will be charged before submitting a full personal loan application.

Alternatives To Opening a Checking Account Without a Bank Account

1. Loans From Family & Friends

If you’re finding it difficult to get a personal loan because you don’t have a bank account, you should consider asking family members or close friends for a loan. Borrowing money from friends and family is usually significantly less costly than traditional personal loans. That said, asking for money from family and friends can often be tricky, especially if you fail to repay them the money that you owe them. So, weigh the pros and cons, but keep them as an option for borrowing money.

2. Car Title Loans

Another option that you have is to take out a car title loan. As the name suggests, to get a car title loan, you will have to place your car as collateral for the loan. This type of loan should be used as a last resort because if you fail to repay the loan, the lender can repossess your vehicle, sell it, and use the funds to recover some of the money it has lent you. So, it could result in the loss of your car, so please approach this type of loan with extreme caution. Additionally, car title loans usually come with very high interest rates, making them difficult to pay off.

3. Credit Builder Loans

Credit builder loans are a very good way to borrow money and improve your credit at the same time. With a credit builder loan, the money that you borrow is deposited into a bank account, and the funds are only released to you after you’ve made all of the payments on the loan. Your payment history is reported to the credit reporting bureaus, improving your credit, while providing you with the money you need.

4. Secured Credit Card

If you need to borrow money but don’t have a checking account, you should consider applying for a secured credit card. Secured credit cards work the same way as do regular credit cards, but they are significantly easier to obtain, especially for someone who has not built their credit. That said, to get a secured credit card, you must place a security deposit in the form of a cash payment and your security deposit determines your credit limit. Once approved, you will be able to use your secured credit card to buy goods and services that you can purchase with a regular credit card. While you use your secured card and make monthly payments, you will build good credit.

The Bottom Line

At this point, you know that getting a loan without a bank account is possible, but it will significantly limit your options as most banks require borrowers to have a checking account for income verification purposes and to deposit loan funds into. So, if you don’t have a bank account, you are left with options that typically cost you more money in the form of higher interest rates and loan fees. If you have general questions or comments, please feel free to leave them in the comments section below.