Can you get a payday loan with no bank account?
Getting a fast loan when you don’t have a bank account can be very difficult. Most lenders require borrowers to have a bank account for several reasons and you are unlikely to be approved for a fast cash loan without one.
Why do lenders need borrowers to have a bank account?
Almost all online lenders and banks will require you to have a bank account before they will lend to you. There are several important reasons for this, including:
To check if you can afford to the loan
Sharing information about your finances, through your bank statements or through Open Banking, is an important part of applying for a loan. It is the main way borrowers can demonstrate that they can afford to make the repayments they have arranged.
Your bank statement shows all the money coming in and out of your account. It shows whether you are spending more than you earn and what your existing essential financial commitments are. Your statements also show whether you are servicing other loans.
The main reason lenders want to look at your bank statement, though, is to see if you have a regular income and how much that regular income is. Without a regular income, you will not be able to commit to making regular repayments each week or each month.
To allow you to make repayments more easily
When you take out a loan, you agree to repay a certain amount on a regular basis; usually every week or every month until the debt is repaid. You make these repayments through your bank account, either via direct debit or through recurring payment authority. Both of these tools mean you don’t have to actually do anything when your repayment is due; it will just be taken from your account on the right day.
To send you your cash!
Perhaps the most important reason you need a bank account to take out a payday loan is so that you can receive your money! If you want to take advantage of the financial products and services available online, you will almost always need a bank account to do so.
So, what can I do if I don’t have a bank account?
If you don’t have a bank account, you should consider getting one. Some bank accounts can be difficult to get if you have limited income or a poor credit history. However, many banks do provide very basic bank accounts that most people will be able to open. Some banks don’t advertise these basic accounts, but they do exist and are the perfect option for anyone who has struggled to get a current account.
What are basic bank accounts?
Basic bank accounts offer you similar services to regular current accounts, but with a few limitations. For example, basic bank accounts may offer you a pre-pay debit card, rather than a regular debit card, and may not provide overdrafts, arranged or otherwise.
They will, however, allow you to:
- Pay in cheques
- Receive your salary
- Accept payments from a loan company
- Set up direct debits and standing orders
- Pay for items in shops and online
- Check your balance using online banking or apps
- Withdraw money from cash machines or in branch
To get a basic bank account, you will usually need to have proof of ID and your address and be over 16, or 18.
What are doorstep loans?
Doorstep loans are a type of loan that people without a bank account might be able to access. They involve a lender calling at your home to collect repayments on an agreed schedule. Therefore, doorstep lenders, or ‘home lenders’ as they are sometimes called, can offer credit to people without a bank account as the transactions can be made in cash.
Doorstep lenders must be authorised by the Financial Conduct Authority by law and can only visit your home if you have given a written request for them to do so. It’s vital to make sure that any lender you deal with is registered with the FCA and you can do this on the FCA website.
This type of loan will usually come with high-interest rates, as they represent fairly high levels of risk for lenders.
What is Open Banking?
Open Banking is a new consumer-friendly service that helps you access better financial products, such as loans, credit cards and budgeting tools. You have to agree to sign up to Open Banking and you can opt-out at any time. Open Banking allows financial providers to view your banking transactions in real time, helping them to make accurate lending decisions.
Alternatives to payday loans
If you don’t have a bank account because you have experienced financial problems in the past and have a poor credit rating, taking out a loan might not be the best option for you. If you have emergency costs that you need to cover, consider one of the following alternatives:
- Borrowing from friends or family
Although it’s not easy to ask loved ones for financial help, many people are surprised to find that they are more than happy to help out if they are able. Most of us would prefer our family members to avoid unmanageable debt, after all.
- Take on extra work
If you are able to take on more shifts at work, add gig economy work or opt into overtime, this is a better option than taking out a loan you can’t afford.
- Cut other costs
Savings on major costs like utility bills, TV packages and grocery shopping are all there for the taking if you put in the legwork and research your options.
- Contact creditors
If you need access to fast cash because you owe money on another loan or on a bill that you can’t afford, contact the company you owe. Any reputable service provider or financial business will listen to your situation and help you repay in a way that is affordable for you. HMRC will set up a payment plan if you are struggling to pay a tax bill, for example. The same goes for FCA-registered lenders, utility companies and banks.
To conclude, opening a bank account is a positive move for most people. Whatever your situation, a basic bank account will help you to begin the process of gaining control over your finances and can help you access tools, services and products that can help you.
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