How Do No Credit Check Car Loans Work

How Do No Credit Check Car Loans Work

No Credit Check Car Loans

If your credit has more than a few blemishes, you don’t want to go through the humiliation of getting turned down for a car loan. Unfortunately, if you don’t have enough money to purchase a car outright, you’re stuck in a tight spot. If this sounds like you, look for dealers that offer no credit check car loans.

Special Dealers

You’re not likely to find a lender that will give you a loan without doing a credit check. Typically, the companies that offer no credit check car loans are small dealerships that are financing the purchase themselves. This can limit the makes and models of cars that are available to you. Often, the dealerships sell these cars at slightly higher prices than other dealers. This is partly to make up for the risks they take when lending to people who have poor credit. If you can’t qualify for another type of loan, though, you may not have any other choice.

What You’ll Need

To apply for no credit check car loans, you’ll need to bring some type of proof that you’ll be able to pay. In most cases, the company requires a down payment and proof of employment. However, this can vary by dealership, so it’s always a smart idea to check about requirements before getting your hopes up.

Buyer Beware

As a smart consumer, you need to be aware of some of the “catches” that dealers who offer these car loans might try to get more money out of you. Aside from the higher car prices, look out for high interest rates on the loans. That’s typical for any type of loan if you don’t have good credit, but the interest rates in this case might be even higher. Another technique the dealer might use is to encourage you to purchase a more expensive car by spreading the loan out over a longer term. This makes the monthly price lower, but you end up paying more overall. For some people, the lower payments make it worthwhile, but others prefer to look at the big picture.

Before Applying for No Credit Check Car Loans

Your credit may not be as bad as you think. While you might not be able to get a credit card, lenders are often more willing to give people with poor credit an auto loan because there’s collateral. If you don’t make your payments, the company will simply repossess your car. A loan that doesn’t require a credit check might seem like the only solution when you are sure that your credit isn’t good, but it might not be your only option. Consider applying for an auto loan through your bank or a local credit union. You might be surprised by their answer and be able to save yourself hundreds or thousands of dollars on the purchase of your car.

No credit check car loans are sometimes the only solution for someone with poor credit. However, it’s important to go into the application process with a thorough understanding of what you’re getting into. Always try your luck with a more traditional loan before checking out these types of dealers.