No Credit Check Loans in India – Important Things to Know

A loan is a debt provided by the bank or financial institution to an individual at an interest rate. There are different types of loans which are granted based on the borrower’s credit history or for a collateral. Then there is the ‘No credit check’ loan which makes it possible for people with a bad credit history to avail loans.

No credit check loans are loans that require no credit check whatsoever. This kind of loan is best for individuals who have a bad credit history or are not sure about their credit history. The loan is different than the secured and unsecured loans. The interest rate for no credit check loan is higher than the interest on the normal loans.

How do no credit check loans work?

No credit check loans work best for people with a bad credit history or a low CIBIL (Credit Information Bureau Limited) score. In no credit check loans, the lender doesn’t check the credit score of the borrower. The lender grants the loan with no requirement for a credit check but at a higher cost. The interest rate for no credit check loans is relatively higher when compared to the normal loan schemes. Most of the lenders just require a proof of income to grant the loan.


Listed below are the features of no credit check loans:

  • This loan is granted regardless of one’s credit history.
  • Quick loan approval.
  • Higher interest rate.
  • Flexible tenure period.
  • Available for higher loan amounts.


Listed below are the benefits of no check credit loans:

  • No need for a good credit history
  • Quick approval
  • Higher loan amount
  • Varied tenure periods
  • Less documentation and paperwork
  • No need for collateral
  • No risk of possession of an asset
  • Fixed interest rates
  • They come with good flexibility. You will be allowed to borrow higher amounts and enjoy higher tenures to repay the loan conveniently.
  • There is a higher probability that your no credit check loan will get approved when compared to other types of loans. This will help you in maintaining your credit score. If you keep applying for loans without getting them approved, then your credit report will most likely get negatively affected.


Listed below are the disadvantages of a no credit check loan:

  • Unfavourable loan terms – The lender sets the loan terms and since the loan is granted without any collateral or requirement of a credit check, the terms are usually in the favour of the lender.
  • Higher interest rates – No credit check loans come with higher interest rates.
  • Short term loans – The tenure for no credit check loans is usually very short.

No credit check loans in India

Banks and financial institutions in India don’t offer No credit check loans but they do offer loans that one can avail with a bad credit score. Secured loan is the best alternative option to no credit check loan in India. Secured loans not only make it possible for people with bad credit to avail loan but it also helps them to build a good credit score. Every bank and financial institution in India provides secured loans.

Secured loans

Secured loans are loans that are granted based on a collateral or security. In Secured Loans, the borrower pledges an asset as a collateral to the lender who provides the loan. A secured loan is beneficial to both the the borrower and the lender as the borrower gets attractive interest rates and flexible tenure periods and the lender can take possession of the pledged asset in case the borrower fails to repay the debt. Listed below are the types of secured loans.

  • Mortgage loan – Loan against Property
  • Car loan – Taken to buy a car
  • Home loan – Loan availed to purchase a house
  • Business loan – Loan against any asset(machineries/raw materials/buildings)
  • Loan against fixed deposit

Features of secured loans

Listed below are the features of secured loans

  • Loan is granted against a collateral or security.
  • Lower interest rates.
  • Loan amount based on the value of the asset pledged.
  • Flexible loan repayment terms.
  • Provides the option of choosing between a fixed rate and variable rate.
  • Quick loan approval process.
  • Different loans to cater to different requirements.
  • Available for non-salaried individuals.
  • No requirement for third party guarantee.

Eligibility Criteria

Listed below is the eligibility criteria for secured loans in India.

  • Salaried, non-salaried and self-employed individuals can apply.
  • Some banks require the applicant to be earning a minimum salary/income of Rs.3 lakh p.a.
  • 18 years or older.
  • The applicant should be a resident of India
  • Able to meet the loan repayments.
  • For business loans, the company must have been in business for a minimum of 3 years.

Documents required:

Documents required to avail a Secured Loan are listed below.

Mortgage loan:

  • Proof of identity- Voter’s Id,Driving license,Pan card,Employee’s Id.
  • Proof of income-Latest salary slip or form 16 with salary certificate.
  • Proof of residence-Electricity or telephone bill, latest bank account statement.
  • Original property documents of the property to be pledged.
  • Latest 6 months bank statement
  • Guarantor form is optional.
  • Copy of lease agreement for LRD(Lease rental discounting) cases

Know more about Mortgage Loan

Car loan:

  • Age proof
  • Identity proof-Voter’s Id,Driving license,Pan card,Employee’s Id.
  • Application form
  • Passport size and stamp size photographs
  • Residence proof
  • Income proof
  • Latest 6 months of bank statement
  • Rate list
  • Signature verification proof

Home loan:

  • Address proof- Voter’s Id,Driving license,Passport
  • Proof of income- Latest 3 months salary slip
  • Latest 6 months bank statement
  • Guarantor form is optional

Business loan:

  • Company profile with an existing product range
  • Promoter profile
  • Audited balance sheets of the latest three years

Know more about Small Business Loan

Benefits of secured loans

Listed below are the benefits of secured loans.

  • Lower interest rates
  • Heftier loan amount
  • Attractive terms and conditions from the lender
  • Flexible tenure periods
  • Can be applied for online
  • Reduced monthly payments due to a longer tenure
  • Individuals with a bad credit history or credit score can easily avail the loan
  • Interest can be tax deductible
  • Lesser income requirement
  • Borrowers from all income levels can apply

Disadvantages of a secured loan

Listed below are the disadvantages of a secured loan

  • More paperwork
  • Risk of losing the asset if the loan is not repaid on time
  • The applicant should own the asset they are planning to pledge
  • A longer term period loan is more expensive
  • The applicant needs to have enough collateral to cover the loan amount
  • The loan terms are set by the lender.
  • Failing to repay the loan will create a black mark in your credit history

FAQs on No Credit Check Loans

  • What is a secured loan?

    A secured loan is a loan granted against a pledged asset by the borrower to the lender.

  • Does my credit history play a role in me availing a secured loan?

    Since the loan is granted against an asset, credit history doesn’t play much of a role.

  • Why should one choose a secured loan?

    Secured loans are easier to obtain even with a bad credit history and one can get attractive interest rates.

  • Who can apply for a secured loan?

    Any salaried, non-salaried and self employed individual can apply for the loan.

  • Can I pledge an asset that is not under my ownership?

    No, the asset to be pledged should be owned by the applicant.

  • Do I have to pay higher interest rates for secured loans?

    Secured loans offer relatively lower interest rates when compared to unsecured loans.

  • How is the interest rate calculated for a secured loan?

    The rate of interest for a secured loan is calculated based upon the loan amount, tenure period and the value of the asset pledged.

  • Can a self employed individual apply for a secured loan?

    Yes, a self employed individual can apply for the loan.

  • Can I pledge the same asset more than once for a secured loan?

    Some banks and financial institutions allow its customers to pledge the same asset more than once to avail a secured loan.

  • What are the consequences of failure to repay the loan?

    If the borrower fails to repay the loan, the asset pledged will be seized by the lender.