Can You Get a Personal Loan Without a Bank Account?

If you don’t have a bank account, you’re not alone. In 2023, 5.6 million households across the United States didn’t use a bank to hold their money or make payments, according to the Federal Deposit Insurance Corporation (FDIC).¹

However, when it comes to getting a personal loan, having a bank account is often used for verifying your income, receiving funds and making scheduled payments. Fortunately, that doesn’t mean getting a personal loan without a bank account is impossible.

While you can apply for and receive a personal loan without a bank account, you may also want to consider whether opening a bank account could give you access to loan options that more closely align with your needs.

Why some lenders require a bank account

Your bank account typically plays a role in multiple parts of the loan process.

Application process

Before offering you a loan, lenders typically use your bank account statements to both verify your income and understand your cash flow, which is how money goes in and out of your bank accounts.

Depending on the lender, it’s possible that you may be approved for a loan without a bank account if you can provide other proof of income, like pay stubs or a W-2.² However, not having a bank account may limit your options when choosing a loan provider.

Receiving funds

Receiving loan funds without a bank account may also be challenging if you need your loan funds right away. Many lenders transfer funds electronically through direct deposit or to a borrower's debit card, but some also offer paper checks.³ Without a bank account, you may be charged a fee to cash a paper check.⁴ You’ll also then have your loan proceeds in cash, which may not be as secure as keeping funds in a bank account.⁵

Making payments

Checking accounts are typically used to make loan payments. Without one, you may have to use alternative payment methods such as cash, money orders, cashier’s checks or prepaid debit cards, some of which may require you to pay in person.⁶ Check with lenders to confirm the payment methods they accept. OneMain, for example, allows customers to pay in cash at participating CVS®, 7-Eleven, Casey’s General Store® or Family Dollar locations.

Finding the right bank account for you

Receiving your loan funds in a bank account can make it easier to access the money you need right away. And you may make quick payments through your checking account to repay your loan. If you want to open a bank account before taking out a loan, there are several options to consider.

In general, you don’t need a bank account with high balance requirements or a long list of features to get a loan. Ideally, the best bank account for you should make it easier to manage your finances responsibly and get resources you need.

If you’re new to banking or have had trouble with banking in the past, you might consider the following types of bank accounts: (Some bank accounts may fall into more than one category.)

Basic checking account

A basic checking option may work well for your first bank account.

With a basic checking account, you can typically use a debit card, write checks, make online payments, withdraw cash from ATMs, receive direct deposits and more. Some banks may offer checking options that don’t require you to maintain a minimum balance, although you generally need to make a deposit to open an account. Checking accounts often come with fees, such as a monthly service fee, ATM fees and overdraft fees, which are charges for spending more money than is in your account. In some cases, you can avoid the monthly fee by keeping a certain amount of money in your account at all times.⁷

“Second-chance” bank account

Hiccups in your banking history, like overdrafts, may make it more difficult to open a new bank account. But some banks offer accounts — sometimes called “second-chance” accounts — that don’t weigh your banking history as heavily. In fact, some may not consider your history at all.⁸

Not all banks offer second-chance accounts. Some accounts may also come with fees or limited features, like no check-writing privileges or overdraft protection, but some work just like basic checking accounts. A second-chance account may have low or no minimum deposit requirement to open, and it can be a good way to get past setbacks and build your banking history.⁹

No-cost checking account

A “free” or “no-cost” checking account is a checking account that doesn’t require a minimum deposit or charge you for many activities that other accounts charge for, such as a monthly maintenance fee, making more than a certain number of transactions, carrying a low balance or for depositing, withdrawing or transferring money. You might still have to cover other costs, including ATM fees, bounced-check fees or overdraft fees.¹⁰ To help avoid charges for going over your balance, consider opting out of overdraft coverage. Unless you opt into overdraft coverage, debit card and ATM transactions that would put your bank account in the negative are declined instead of overdrawing your account.¹¹

Online-only checking account

An online-only account may be appealing if you live far from a bank branch or don’t need to visit the bank in person. Online-only banks may charge fewer fees than brick-and-mortar banks, and they might reimburse ATM fees or allow free withdrawals from a partner ATM network.¹² Keep in mind that it may be more challenging to deposit cash at an online bank, and you won’t have access to in-person customer service.¹³

Loan alternatives if you don’t have a bank account

While having a bank account may make it easier to take out a loan, it’s not always required. You may even qualify for a personal loan for some lenders, including OneMain, if you’re able to show other proof of income and willing to use alternative methods to receive funds and repay the loan.

However, there are other ways of borrowing that some people turn to if a personal loan isn’t an option. It’s important to understand the facts and the risks of each one before you decide.

Borrowing from friends or family

A friend or family loan may help you get out of a financial bind without worrying about a formal application process or interest (the cost of borrowing money from a traditional lender). But disagreements or miscommunications about the loan may put a strain on your relationship.

Before accepting the loan, make sure you and your friend or family member are on the same page about repayment. Setting specific terms in writing may help you avoid misunderstandings. Maintain an open line of communication with your loved one and address hiccups right away to relieve tension.

Credit card cash advance

If you have a credit card, you may be able to access funds quickly with a cash advance. A cash advance is a short-term loan that lets you borrow cash directly against your credit card's line of credit. You can generally get a cash advance at an ATM, by showing your card to a bank teller or by requesting a convenience check to cash at a bank.¹⁴

A cash advance might be a helpful tool if you need a relatively small amount of money quickly. But credit card companies typically limit cash advances to a few hundred dollars or a specific portion of your credit line, so they may not work for bigger expenses. Plus, a cash advance usually costs more than a standard credit card transaction, because it may come with higher interest rates and additional upfront fees. Also, unlike credit card purchases, interest on a cash advance begins accumulating the day you make the withdrawal. Simply charging an emergency expense to your credit card may be a lower-cost option than taking out a cash advance in many scenarios. As always, try to pay down your balance as soon as possible.

Title loan

Title loans are high-interest, short-term loans that use your car’s title as collateral, which is a valuable possession you use to back the loan. If you don’t repay the title loan, the lender may take possession of your car.

Title loans may help you get money quickly without a bank account, but they come with many risks. A title loan typically has a very short repayment timeline, such as 15-30 days, which can be difficult to meet if money is already tight. And, a title loan typically comes with high fees and a very high annual percentage rate (APR) — as much as 300% or more — that may make it difficult to repay.¹⁵

An APR is the yearly cost of borrowing, including interest and fees, and you can use it to compare the cost of one loan to another. For example, personal loan APRs often range from 6-36% and the average credit card APR is about 21%.¹⁶

Pawn shop loan

Pawn shop loans are typically short-term loans that are paid back with interest and fees. A pawn shop loan is backed by collateral, such as an electronic device, a musical instrument or a piece of jewelry. You provide the collateral to a pawn shop, and they will give you a loan based on their appraisal of the item’s value. Typically, the loan will be a percentage of the item’s resale value.

However, in addition to repaying your loan, you’ll also be responsible for paying fees and interest charges that could be as high as 240% or more, which may make pawn shop loans pricier than other borrowing options.¹⁷ If you don’t repay the loan in time, the pawn shop can sell your item to recover its money.

Payday loan

Payday loans are short-term loans of up to $500 that typically require you to repay the lender on your next payday. If approved, you may receive the funds in cash, check, electronic deposit or a prepaid debit card, so you don’t need a bank account to qualify or get the money. However, payday loans may quickly become expensive and difficult to manage.

Payday loan APRs can be as high as 400%, making these loans very expensive. If you can’t repay the loan in time, you may have to roll your balance over into a new loan, which can become even more expensive and potentially trap you in a cycle of debt that could be very difficult to get out of.¹⁸

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Your next loan is within reach

A bank account may make it easier to get certain types of loans, but you may still be able to get a personal loan without one. If you need to borrow money, it’s a good idea to talk to different lenders to see what their requirements are. You may have more options than you realize.

If you do want to consider an alternative borrowing arrangement, it’s important to understand what you’re responsible for and what the risks are. As with any type of loan, consider whether it brings you closer to your financial goals before you commit.

Sources

1.https://www.fdic.gov/household-survey/2023-fdic-national-survey-unbanked-and-underbanked-households-report
2 https://www.nerdwallet.com/personal-loans/learn/what-are-the-requirements-for-a-personal-loan
3. https://www.forbes.com/advisor/personal-loans/how-do-personal-loans-work/
4. https://www.bankrate.com/banking/checking/how-to-cash-a-check-without-a-bank-account
5. https://www.experian.com/blogs/ask-experian/how-much-cash-should-you-keep-at-home/
6. https://www.onemainfinancial.com/help-center/products/personal-and-auto-loans/topics/making-loan-payments
7. https://files.consumerfinance.gov/f/documents/cfpb_adult-fin-ed_checklist-for-opening-an-account.pdf
8, 9. https://www.experian.com/blogs/ask-experian/what-is-second-chance-banking/
10. https://www.consumerfinance.gov/ask-cfpb/i-opened-a-free-checking-account-but-there-are-fees-charged-on-my-account-can-my-bankcredit-union-do-that-en-961/
11. https://www.bankrate.com/banking/checking/what-is-an-overdraft-fee/#cost
12. https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internet-banks.asp
13. https://www.bankrate.com/banking/savings/online-vs-brick-and-mortar-banks
14. https://www.nerdwallet.com/article/credit-cards/what-is-a-cash-advance
15. https://www.experian.com/blogs/ask-experian/how-do-title-loans-work/
16, 17. https://www.experian.com/blogs/ask-experian/what-is-pawn-shop-loan/
18. https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/