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You don’t need a credit score for these loans but are they worth it?
No credit check car loans might be tempting if you’ve been denied in the past. However, no credit check loans can be extra-expensive and might not be worth the price.
How do no credit check car loans work?
No credit check car loans work like any other car loan. The difference is the lender assumes that you have bad credit — possibly worse than you actually have. You’ll likely end up with:
Large down payment. It’s hard to get full financing with bad or no credit — which a no credit check loan assumes.
High rates. No credit check lenders tend to ask all borrowers for the same rates, which are typically less favorable those that consider your credit.
Long loan terms. Many no credit check car loans have terms 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 alternatives are available.
Compare car loans for all credit types
Updated May 25th, 2019
What do I need to apply?
Just because your lender isn’t checking you 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, information about your employer or 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. This also indicates that you’re responsible enough to have a savings, making your application stand out more.
Alternatives to no credit check car loans
Car loans with a cosigner. Bring on a cosigner to help you meet credit and income criteria or 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? Lenders like Boro offer auto financing specifically for students — and even accept applicants on a student visa.
Bad credit car loans. Even a car loan provider that accepts bad credit might come with more favorable 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. Use our calculator to make sure you’re signing up for something you can afford.
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.
A no credit check car loan may be a good option if you have nowhere else to turn and need a car, but it doesn’t hurt to see if you prequalify for a car loan with a better interest rate.
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 borrowed 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
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.
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