No credit check car loans work like any other car loan. The difference is that the lender assumes that you have bad credit — possibly worse than you actually have. You’ll likely end up with:
A large down payment. It’s hard to get full financing with bad or no credit — which a no credit check loan assumes you have.
High rates. No credit check lenders tend to ask all borrowers for the same rates, which are typically less favorable than lenders who determine your interest rate based on your individual credit history.
Long loan terms. Many no credit check car loans have terms of over five years. This combined with high rates means that you could easily end up paying multiple times your car’s value.
Since these loans likely have high interest rates and unfavorable terms for you as a borrower, so they should only be used when no other alternatives are available.
Just because your lender isn’t checking your credit doesn’t mean it won’t consider other factors. Typically you need to provide the following when applying for a no credit check loan:
Proof of steady employment. This could include your last few pay stubs, Notices of Assessment from the past couple of tax years, information about your employer and any other job-related questions.
Proof of your ability to repay. A lender wants to know you’ll be able to repay the loan, even if you have bad credit. A low debt-to-income ratio will help prove you’re able to handle the monthly payments.
A sizable down payment. The less you have to borrow, the better. Borrowing less than the full price of your car indicates that you’re responsible enough to have saved some money yourself, making your application stand out more positively.
Alternatives to no credit check car loans
Car loans with a cosigner. Bring on a cosigner to help you meet credit and income criteria in order to qualify for better rates.
Personal loans with cosigner. Don’t want to risk losing your car? Consider applying for an unsecured personal loan with a cosigner who has strong credit to help you qualify for more favorable rates and terms.
Car loans for students. Don’t have a credit score yet? Some banks and private lenders may offer auto loans for students. If so, having employment and getting good grades may help you get approved.
Bad credit car loans. Even a car loan provider that accepts bad credit might come with more favourable rates and terms than a no credit check loan.
What are the dangers of a no credit check car loan?
Large repayments. Even with long terms, no credit check car loans can come with high repayments, thanks to high rates.
Repossession. If you’re late enough on your car loan repayment, you could end up losing your car.
Car loan scams. While no credit check car loans aren’t necessarily a scam on their own, you might want to look out for other warning signs like guaranteed approval before you’ve submitted any information or the lender requiring upfront payment. If it looks too good to be true, look very closely at the terms, conditions and application requirements as well as customer reviews and other information about the lender. Only proceed if you’re confident that the financial institution you’re dealing with is legitimate.
A no credit check car loan may be a good option if you have nowhere else to turn and really need a car, but it doesn’t hurt to see if you pre-qualify for a car loan with a better interest rate through more ordinary means of financing.
Frequently asked questions
The key to this is research. Make sure the lender has the right licenses and check independent online reviews from other people who have already gotten a loan. You should also carefully read the loan terms to make sure you’re getting what you’ve agreed on.
It’s possible with a no credit check car loan, but you might want to avoid it. Taking on two loan repayments might make it difficult to repay your debt, and it may also negatively affect your credit score.
Yes. Check the loan contract for details on origination fees and any ongoing fees that apply. You should also check to see how much missing a payment will cost and if there are any other fees that the lender has failed to mention.
You may not be required to have a cosigner, but if you do, you could increase your chances of getting approved by the lender.
You can take several simple steps to improve your credit score and enhance your future borrowing prospects. Getting a credit card with a modest limit and regularly making purchases and repayments on that card will improve your credit (the key is to promptly pay off your balance and not let it accumulate on the card). Also try to pay down your debt, if not eliminate some of your sources of debt altogether. This will look great on your credit history and improve your chances of getting approved for a car loan.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.