What Is No Credit Check?
If you want to buy a car but can’t because of your pending credit card balances, repossessions and other huge financial problems in the past, you can reach out to dealerships that offer no credit check car loans. This type of financing is offered to anyone who has poor credit or no credit at all. With no credit check loans, you might be limited to the amount of the loan but, you can choose a cheaper car option to fit the loan amount. One of the reasons for this is that this kind of financing is offered to customers with really poor credit or no credit history at all. No credit check means that a financing company will not check your credit score prior to loan issuance.
Who’s Qualified for a No Credit Check?
You must be at least eighteen years old and have a regular income stream. You will need to provide proof of income like pay stubs and possibly references for employment verification. The number one thing no credit check lenders look for is a consistent income stream. These lenders understand that some people simply cannot get a loan any other way so if you have a consistent paying job, and no other way to get approved, this is your option.
These types of lenders tend to offer higher interest rates than bank lending rates. On the other hand, all financing is offered on-site, which means everything is done in one place from the processing of the paperwork, to selecting your vehicle, and to payment of monthly dues.
Common Features of a No Credit Check Loan
- Put more money down – You are more likely to qualify for a no credit check loan if you provide a higher down payment. This take some risk off of the lender and gives you a lower loan amount which means lower monthly payments in return. Thus, it’s a win-win situation for the client and dealership.
- Agreeing to have your car as collateral – In the event you default on your loan or have several missed payments, some lenders will have your car as collateral.
- Opting for long loan terms – Usually for no credit check vehicle loans, they have terms that are higher than five years. However, short term loans are preferable than long-term loans.
- Choosing debit payments on time – A direct debit is the common arrangement when paying off your loan. For some dealerships, they prefer you go directly to their office and pay in cash.
How to Apply for a No Credit Check Loan
Take Advantage of In-House Financing
This is the main advantage of buy here pay here dealerships. Here, you can buy and set up your loan payments all in one place. In fact, you can opt to pay once a week or once a month. If you have an idea of how much to pay every month, make use of a bad credit auto loans calculator or request a quote from car dealers. Sometimes, a dealer will match your payroll dates to the date of your monthly due. This is intended for buyers to avoid defaulting on their car financing and regain a new payment history.
Credit Check Car Loan Alternative
If you are approved for a No Credit Check loan and you don’t like the terms offered by the lender or the interest rate is too high, you could ask the lender to do a credit check to see if that can help lower your interest rates.
A Need for Co-Signer
Some dealerships don’t require you to have a co-signer for No Credit Check Loans but if you do, you can expect higher chances of getting approved. A co-signer is a good option if you don’t have long-term history of employment or you want a better interest rate. Lenders like having a co-signer because if you default on the loan, it becomes the responsibility of the co-signer to settle.
Understand the Risks
When applying for buy here pay here no credit check loans, there are risks involved. If you do not pay the loan on time, you risk getting repossessed. Also, these loans don’t always help you rebuild your credit. Not all No Credit Check lenders report to the credit bureaus. This type of loan is really only ideal for emergency situations where you absolutely need a car to get to work, etc. Only apply for this type of loan if you are 100% sure you will be able to pay it back on time each month. Always be sure to read the fine print to make sure there are not any hidden fees associated with the loan.
Separate Negotiating for a Price from Financing
A dealership has access to several lenders. If you choose a car try to talk the price down if possible, then look for a lender to loan on the car.
There are several lenders today who’ll approved you for no credit check car loans, but the often high interest rates will vary. Be sure to shop around and know what to look for. Try to choose a cheaper but reliable car and if possible, have a third party inspect the car if it is used. You want to be sure you get a good, working vehicle.
Be ready to put some money down or take a longer term loan to qualify. For some, they can lengthen their loan to five years or more. All of this, however, depends on your preference. And whatever preference you make, remember to only use this type of loan as a necessity, not just because you want a new car.