There are lots of loans available to us now. It used to be that we just had the more traditional ones such as personal loan, mortgages and credit cards, but there are not more types available particularly in the form of no credit check loans. You may wonder whether this might be a sign of what is to come in the future. It is worth knowing what they are and why they may or may not be a thing of the future.
What are no credit check loans?
A no credit check loan is rather poorly named as all lenders do credit checks. However, they look for different things. Traditional lenders will look at your credit report to see how reliable they think you will be at repaying the loan. They will see whether you have successfully repaid loans that you have had before and how good you are at making regular repayments for things like utility bills and rent. However, a no credit check lender will not be looking for the same things. They will not be concerned by your borrowing history but will be looking to just make sure that you have money coming in regularly and they will want evidence of this so that they can be sure that you will be able to repay.
Could they be a thing of the future?
It could be thought that this type of loan will get even more popular in the future. They are already expanding with regards to the amount of people using them and the different types that are available. This could indicate a pattern of expansion which could continue.
Of course, there will also need to be a demand for this sort of loan too. It is possible that as the UK leaves the EU that some people might be worse off and more likely to need to borrow. IT might also lead to people struggling financially if process go up and therefore, they may need to borrow more money. With an increase in borrowing it is likely that there will be an increase in no credit check loans for the short term as well as more traditional ones.
As the loans grow, more people will become aware of them and this could mean that they will be more likely to use them. Spreading by word of mouth as well as lenders being able to afford advertising as they grow should help them to expand.
It may also be felt that there are gaps in the market that need filling in this sector. If more loan types are introduced then it will mean that the loans will appeal to more people and that will mean that there will be borrowers of this sort of loan.
Environmental concerns could also lead to a need for more money. People may have to swap their vehicles or buy other energy saving products which could be expensive and they may need to borrow money in order to do this.
The population is also growing and this will mean that there will be more people and that could mean that they will need more borrowing.
Why they may not be
Of course, it could be the case that borrowing might lessen. It could be that people get worries about the UK leaving the EU and decide to reduce their spending as a result and they may have less need to borrow. People may just be more careful with their money.
Environmental concerns could lead to people wanting to buy less things in order to pollute less and therefore they may spend less money and have less need for borrowing.
There is more financial education in schools which can help people to be better at budgeting. Although, they are not taught to avoid all borrowing, they will be taught the difference between good and bad loans. They might therefore decide to borrow less and they may also budget better. This could lead to a reduction in the demand for this type of loan.
It is also very unlikely that the demand for traditional loans will fall massively. The high street lenders seem to have a good advertising budget and so they are likely to keep getting customers. Although some branches are closing and a few banks have closed completely, this is unlikely to be a trend that will spread over the whole banking sector as people will always want to have current accounts as well as save and borrow.
So, it is not that hard to tell whether no credit check loans will be a big thing of the future. It is likely that our demands will change and whether this impacts lending is not easy to predict. It is likely that there will still always be a choice of loans but what those are is not easy to predict.