No-credit-check car loans might be tempting if you’ve been denied in the past. However, they can be extra-expensive and might not be worth the price. Consider the alternatives before signing up.
Be 18+, monthly income of $1,800+, reside in a state where RoadLoans operates and do not have open car loan with RoadLoans, parent company Santander Consumer USA or Chrysler Capital
The most common place to find a no-credit-check car loan is through a dealership. You can find these directly or by using a connection service like CarsDirect.
Some direct lenders like RoadLoans also offer financing without checking your credit score.
Dealership financing vs. loans with no credit check
Dealership financing is often faster than going with a lender. But unless you shop around, you might not get the best deal out there.
Lenders might not necessarily offer a better deal, but it’s easier to compare your offers by prequalifying. Some car loan providers offer online preapproval, which gives you an offer you can take to a dealership to finance a car or negotiate a better deal.
Should I get a no-credit-check car loan?
It depends on your situation. You might want to consider a no-credit-check car loan if you:
Have very poor credit. If your credit score nears the lower end of the scale, you might not necessarily get a worse deal at a dealership versus going through a third-party lender.
You need a car immediately. No-credit-check car loans tend to have a fast turnaround time and could be useful if you’re in a real pinch.
Don’t have a cosigner. Without a cosigner, your options are severely limited when you have bad or no credit.
Even in these three scenarios, you might still want to consider some of the alternatives. You still might be able to find a better deal with bad or no credit.
What are the drawbacks?
Consider these potential pitfalls before taking out a no-credit-check car loan:
Large down payment. It’s hard to get full financing with bad or no credit — which a no-credit-check car loan assumes.
High rates. No-credit-check lenders tend to charge all borrowers the same rates, which are typically less favorable than 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 you could easily end up paying multiple times your car’s value.
Large repayments. Even with long terms, no-credit-check car loans can come with high repayments, thanks to high rates. Use our car loan monthly payment calculator to make sure you’re signing up for something you can afford.
Risk of 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 of car loan scams like guaranteed approval.
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.
These loans tend to have high interest rates and unfavorable terms for you as a borrower, so they should only be used when no alternatives are available.
What factors do lenders consider?
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, 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
Before taking out an expensive car loan that doesn’t require a credit check, you might want to consider your other options first:
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 a 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.
Apply with a CDFI.Community development financial institutions (CDFIs) are nonprofit banks or credit unions that often offer favorable financing to members of their nearby community — including car loans for people with bad credit.
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 first. You can learn more about what your options are by reading our guide to car loans.
Frequently asked questions
How can I find a reputable lender?
The key to finding an above-board lender is research. Make sure the lender has the right licenses and check independent online reviews from former borrowers. You should also carefully read the loan terms to make sure you’re getting what you’ve agreed on.
Can I take out a loan to cover the down payment?
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 afford your regular monthly expenses.
Will I have to pay any fees?
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.
Will I need a cosigner?
You may not be required to have a cosigner, but if you do, you could increase your chances of getting approved by the lender.
Are there any ways to improve my credit score?
You can take several simple steps to improve your credit score and enhance your future borrowing prospects, like correcting late payments and using a credit-monitoring service to keep you informed.
Alex Jeffs is the senior publisher for personal, car and business finance at Finder. He has been building websites since he was 14 years old and has tested cars everywhere from race tracks to Oodnadatta.
If you’re in the market for a car don’t miss out on this guide to buy a car, get all the info you need and a range of loans to help you get into your car sooner.
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