Avoid the Risks of Getting Short Terms Loans without a Bank Account


The Federal Deposit Insurance Corporation (FDIC), “committed to expanding Americans’ access to safe, secure, and affordable banking services,” estimates there are 9 million US households without an FDIC-insured bank account. There are large inner-city neighborhoods without banks, and some areas of the country with few or no banking services.

If you live in one of these areas, or an area with plenty of banks yet you simply don’t have an account, can you obtain a loan without a bank account? The answer is yes, you can even get loans online without a bank account, but the loans will be more expensive, less flexible, and riskier than bank loans or non-bank loans available only to people who have a bank account.

Risks of Taking out Loans without a Bank Account

Three common ways of getting a loan without a bank account are going to a pawn shop, a title lender, or a payday lender. Each method has advantages, but the risks can greatly outweigh them.

  • Pawn loans – Tap into the value of personal possessions without selling them, but you may not be able to raise much money, and you run the risk of losing your possessions.
  • Title loans – Tap into the equity of your car and you’ll get only a fraction of the car’s value, and if you can’t repay the loan you could lose an asset much more valuable than the amount you borrowed. If you default the lender can sell your car, and in some states keep the amount greater than the loan balance as profit. If the sale doesn’t bring in enough to cover the loan, they can still collect the rest from you.
  • Payday loans – Useful for getting money in a pinch, but they have to be paid off in a lump sum, and you may find you don’t have enough in your paycheck to pay off the whole loan and your other bills and expenses. You might end up rolling the loan over for another week or another payday, then find there’s not enough in that paycheck to cover your expenses and pay off the original loan. You could end up rolling the loan over several times and thus paying several times the original loan amount in interest and fees.

All of these loans have significant risk, and Power Finance Texas doesn’t offer any of them.

We don’t want to trap you in a bad loan. Indeed, our application is designed to protect you from taking out a loan you won’t have the ability to repay. Instead, we offer installment loans of $100 to $1,250 to be paid off in 6 monthly installments, with no penalty for early payment.

An Alternative to Taking Loans without a Bank Account

A better option than a risky and expensive short-term loan is opening a bank or credit union account—although it won’t guarantee you a loan, it will open the door to non-bank lenders who require a bank account. There are other advantages to opening an account:

  • You can receive direct deposits of paychecks and other funds.
  • Bank fees may be much less than fees at a check cashing store.
  • You can pay bills online, which will save postage and the cost of buying cashier’s checks, prepaid debit cards, or paying bills in person.
  • Thanks to mobile and online banking, not having a bank building nearby is less of an obstacle.
  • Some bank apps allow you to deposit a check by snapping a picture with a smartphone, a further convenience when you are not located near a bank building.

Follow these steps to open a bank account.

1. Clear Up Credit Issues That Hinder Getting an Account

When opening a new account, banks pull a bank account usage report, usually through ChexSystems. If you lost a bank account, or had one closed with outstanding fees, get a free copy of your FACTA report from ChexSystems.

  • As with credit reports, you’re entitled to one free report per year. If you find any inaccuracies, dispute them.
  • If you can’t get a bank account, ask about a second chance account. You can start your search by looking at any of several articles from Nerdwallet.
  • For information on getting your free credit report and improving your credit, see our post on “Credit 101 – What to Know and How to Improve It”.

2. Find Out What’s Available to You

You may have heard that banks charge fees and plenty of them, so look carefully at the bank’s schedule of fees, and think about how you use money. Consider changing your spending habits to avoid fees, or find a bank with no monthly fees.

Online Banks

But what if there isn’t a bank in your area to open an account? What if the nearest bank is miles away in another part of town, or even another city?

3. What You’ll Need to Open a Bank Account Online or In Person

  • A driver license, passport, or other government-issued ID
  • Your Social Security number, date of birth, and other identifying info like email address and phone number
  • Money to make your first deposit

Opening a bank account is a great first step in applying for a short-term loan, and paying it off on time or early is a great way to improve your credit and build a history of responsible borrowing.