If you need a personal loan and are worried about the requirements of most lenders, it is likely that you have researched and met the term “documentless loan”. Basically, this is a loan that does not require the potential borrower to provide documents, for example, proof of employment, to obtain approval for a personal loan.
For any self-employed worker who does not receive their income from a typical 9-5 job, or simply can not provide proof of assets or income, a personal loan that does not require a document is certainly a welcome option. Unfortunately, this type of loan is problematic: it does not really exist. We do not want to bring bad news, but no legal lender can provide a loan to a consumer without at least some conditions. And, often, one of these requirements is proof of some kind of income.
What about loans without identification?
In the same way as loans without documentation, loans without identification are not types of real loans. No legal lender can grant a loan to a consumer without having at least one piece of identification. Generally, you will be asked to provide some form of identification issued by the government. Lenders with stricter approval guidelines will often ask for your SIN additionally.
What should I do if I need a “restricted” personal loan?
Now that we have burst the bubble of the “undocumented” personal loan, we want to tell you very clearly that you still have countless options that can help you deal with the financial situation in which you find yourself. If you were attracted to the idea of ”no document” personal loans because of your low credit or because you do not have a stable income, here is another term, the “little document”. Let’s be honest, personal loans that require few documents are probably what people call “undocumented” loans unless they lie to you or try to scam you.
What does “restricted documents” mean?
Personal loans with limited documents are loans that do not require or a little documentation to be approved. They are also loans that do not require potential borrowers to have a 9-5 job or to submit to a credit check. Limited documentation does not mean that a lender will simply approve anyone who applies for a loan. This is simply impossible and will not happen.
Why do lenders require documentation to approve a borrower?
In simple terms, the requirement to provide a lender with specific documentation allows the lender to determine if he wants to lend you. Lenders need to know that a potential borrower has the financial capacity to repay the requested loan, within the agreed period. What this means is that a potential borrower must receive some kind of income. This is certainly where some consumers begin to worry and look for alternative lending methods, for example, “paperless” loans.
The word “income”, especially when used by lenders, naturally leads borrowers to think they need a traditional 9-5 job. As mentioned above, this is not always the case. There are countless lenders who specialize in working with consumers who do not have a regular paycheck and who receive their monthly income from alternative sources.
Reasonable and Practical Loan Responsibilities
What is one of the most important qualities that any lender, no matter what type of loan it provides, should have? We believe that most people would say honesty and maybe even reasonable lending practices. Many of these qualities are to ensure that those who choose to lend can, in fact, afford the financial responsibility of indebtedness.
All legal lenders must perform some type of due diligence, whether it is a credit check or ensuring that the borrower receives adequate income monthly. Once diligence is completed, lenders will make their decision based on the potential to handle a loan from the borrower. Being rejected for a loan that you really need can be frustrating, but when a lender has responsible practices, he always places the borrower first, which can sometimes lead him to reject it if he believes that the borrower will not be able to manage a new loan.
Another reason a lender will require at least some forms of documentation to approve a borrower is to assess the risk. When a lender approves a borrower, he takes some risk. The risk that the borrower stops making payments on the loan. As a lender analyzes a claim, it determines the degree of risk it will assume if it approves the borrower. If the risk is too high, the application will unfortunately have to be rejected.
Alternative loans “without documentation”
Know that looking for a personal loan without documentation could very well be a waste of time. You would be better off looking for an alternative lender who specializes in small documentation loans if you have specific income requirements.
Short-term personal loans
If your income comes from a source other than a 9-5 job, then a short-term personal loan is a great option for you. Typically, these types of loans are provided by online lenders who specialize in working with borrowers who have been rejected by banks and other more traditional financial institutions. If you receive a monthly income from the government (Canadian child, disability, etc.), or if you are self-employed, you can still obtain this type of loan
We include credit cards in this list because they are a relatively easy way to borrow a small amount of money for a short time. If you find yourself in an emergency and need to cover an unexpected cost immediately, you can still charge it to your credit card. You simply must not forget that credit cards can be expensive and their irresponsible use could lead you to debt.
Friends and family
If you really need a “limited documentation” personal loan, asking a friend or family member is probably the best option. Of course, this is not an option everyone can take advantage of because borrowing money from someone in your life could damage the relationship. If you end up choosing this option, make sure you reach a reasonable agreement that you both agree on.
If you have a 9-5 job where you receive a regular income, these options might still work for you, we are simply trying to highlight alternative options for consumers who fear that personal loans “without documentation” are their only option .
How to obtain a loan with limited documentation?
When it comes to getting approval for any type of loan, there is no way to know if you will be approved. In fact, any lender who assures your approval surely lies to you and probably tries to rip you off. So, whether you’re asking for a large mortgage from a reputable bank that requires a lot of documentation, or a more modest personal loan from a private lender that requires few documents, no one can or should guarantee your approval.
Applying for a limited documentation loan and being approved is similar to applying any other type of loan. You should choose a lender with whom you are comfortable, complete the application and make sure you are available to answer calls or emails from the lender.
Why would anyone want a limited documentation loan?
Restricted loans are more common than you think. Despite the fact that they may have a bad reputation and are sometimes associated with dishonest scams or lenders, limited documentation loans are simply another financial tool, which, if used properly and responsibly, can help any consumer in need. Taking a loan is a definite personal choice and the reasons someone could apply for a loan are also personal. That said, of course there are many common reasons.
Bad credit or no credit
For anyone with bad credit, or no credit, a small documentation loan is attractive because it usually means that no credit check will be made. It also means that you will not have to worry about being rejected because of your low credit rating. In addition, consumers who do not have credit, either because they are new to Canada or simply because their credit is not yet built, will also find that a small documentation loan is attractive.
Self-employed or unemployed
For people who are unemployed, or self-employed, a small documentation loan is attractive because finding themselves in a situation where they do not receive a concrete and regular paycheck, approval for a loan is more difficult.
Reasons for confidentiality
Applying for a loan from a bank or other more traditional financial institution can be a pervasive process, especially for those who are not comfortable discussing their personal financial situation. Restricted documentation loans can provide you with the confidentiality you want because you will only need to share minimal information in order to apply.
Since small documentation loans are typically smaller amounts and have limited restrictions, a lender can approve a borrower in as little as a few hours (usually a 24-hour approval period). So, if you need money quickly, a limited documentation loan can be exactly what you need.
What type of lenders offer limited documentation loans?
Unfortunately, you will not be able to go to your local bank and ask for a loan that requires little or no documentation. This type of loan is usually provided by small lenders specializing in working with consumers who have difficulty accessing loans or financial products from recognized banks. Most private lenders conduct their business online, which means that you will be able to apply for a loan from your own living room.
It is important to remember that when you are looking for a limited documentation loan, not all lenders will care about your best interest. So, it is very important that you know how to spot a scam before being a victim. Here are the most common ways to find out if a lender is trying to scam you:
- Loan insurance or initial fees. It is illegal for any lender to ask for an upfront payment or ask you to pay for loan insurance before receiving your money.
- Access to your personal bank account. Never provide a lender with direct access to your bank account, they will steal your money.
- Guaranteed approval. No lender, no matter how well known, can guarantee you approval.
- Request for strange payments. No legal lender will ask you to make a payment via a credit card or gift card.
Choosing the right lender
It is almost impossible to find a lender of personal loans “without legal decumulation”, but it is not impossible to find a lender who is willing to work with you to get you the financing you need. Always make sure you are comfortable with the lender before proceeding. A professional, reliable and trustworthy lender can and will make all the difference.