Can you get a payday loan with no bank account?

Have you been wondering whether you can get a loan with no bank account? Well, 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.

If you need access to a payday loan and don’t have a bank account, read on. We have some tips on how you can get your hands on some fast cash in an emergency.

Why do lenders need borrowers to have a bank account?

Lenders don’t readily offer loans without bank accounts in the UK. 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 the loan

Sharing information about your finances, through your bank statements or 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 regularly; 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 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.

Can I apply for a payday loan with no bank account?

While it is possible to take out a payday loan with no bank account, doing so can negatively impact your long-term financial health. Most banks and loan companies will require customers to hold a bank account and debit card before approving an application, in order to assess their affordability and provide funds.

Loan companies will use your previous bank statements to corroborate that you have a regular income and to check that wages are regularly deposited into your account.

Reputable lenders will also need to carry out a comprehensive credit check before approval, to accurately assess risk as stipulated by the Financial Conduct Authority (FCA).

The FCA is the conduct regulator for the financial sector and requires loan providers to assess the competence, capability, integrity and affordability of applicants before approving a loan. Possessing a bank account also allows lenders to easily deposit funds in your account, either by direct debit or standing order, and ensures that there’s a record of how many instalments you’ve received.

Finally, storing money in a bank account means that you can earn interest and are protected against the declining value of money. If you’re able or willing to open a bank account, you’ll have access to a wider range of lending options. For more on the topic of lending, head over to our guide on everything you need to know about payday loan criteria.

So, what can I do if I don’t have a bank account?

You might be wondering ‘How do I get a loan with no bank account?’ Well, as mentioned, while it is possible to get a payday loan with no bank account, doing so can be detrimental to your long-term financial health So, 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?

Next, let’s delve into how to get a payday loan with no bank account. Doorstep loans are a type of loan that people without a bank account might be able to access. They involve a lender calling 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.

However, just because it is possible to take out a payday loan without a bank account, doesn’t make it a good idea. This type of loan will usually come with high interest rates, as they represent fairly high levels of risk for lenders.

These high-interest rates are offered over a short lending period, meaning doorstep loans often end up far more expensive than other forms of credit. Because doorstep loans are a non-traditional form of borrowing that doesn’t require good credit, the sum of money available is often considerably smaller than those that are offered by traditional lenders.

While borrowing from a bank or other well-known financial institution means that there’s less to worry about in terms of reputability, there are unregulated companies that will try to take advantage of customers looking to get funds quickly with no bank account. It’s incredibly important to learn how to distinguish between legitimate and unregulated lenders – otherwise you never really know who you’re dealing with.

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 for 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, you might be wondering if payday loans are the best way to get cash fast.

Well, if you have emergency costs that you need to cover, you could 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 can 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.