Do you have bad credit? It seems like every lender out there has slammed their door on you. They won’t lend you money based on your chequered financial past.
Don’t think that every route to the car you need is blocked. A No Credit Check Car Loan might be your right solution.
How do they work?
Usually, lenders will require you to provide financial information, such as payslips and employment records, before they lend out money. Like any business, they want to reduce risk.
Borrowers need only provide their ID to a No Credit Check lender. They will not factor in your credit history when deciding to finance your desired car.
One advantage is that you’ll get fast approval, sometimes within minutes.
Some of these lenders are car dealers or second-hand car yards themselves. Often, they will ask for a deposit from the borrower that could be as high as the wholesale price of the car.
What can I expect?
The car loan will likely have a higher interest rate than comparable, conforming car loans. The lack of a credit check means higher risks for the lender.
A No Credit Check Car Loans usually have longer terms than other car loans or personal loans. These can range from five up to ten years. In the long run, you will be paying more.
If you want to trade your car in or repay your loan early, the value of your car is still far less than what it cost to finance the vehicle.
To help reduce the impact of this value gap, it helps to make repayments greater than the contracted minimum.
Will a No Credit Check Car Loan improve my credit rating?
Not straight away, no. You will have to keep up with repayments for an absolute minimum 12 months before your credit rating shows signs of improvement. It’s also advisable to make additional repayments.
If you keep on track, mainstream lenders and other motor financiers will begin to look favourably upon your credit history.
Though there are some drawbacks to a No Credit Check Car Loan, you can use it as a pathway to the car you need and a better credit rating.