No credit check auto loans can seem like an interesting way to buy a car. You can skip the process of a credit check with guaranteed financing through the dealer. Dealers offering buyers the lure of fast, risk-free auto purchases and the ability to pay for the car directly to the car dealer.
However, several things will affect your credit status and your car purchase in a negative way that you should know about.
Everyone shopping for a “no credit check car” should see our “new car buying guide” to learn the facts about negotiating with car dealers and selecting the best car loan near you. You will be amazed at the money you will save, and will be able to negotiate with more confidence than you ever have before.
Lets look at “Several practical options including credit check loans with bad credit” and “low credit score auto loans” for people looking for a “no credit check auto loan” so you can understand the facts before you apply for a no credit check auto loan.
The buy here pay here option started in the 1970’s when the savings and loan organizations were having problems. These locations offered car buyers an opportunity to be able to purchase an automobile without having to find a financial lending institution that was able or willing to make the loan. These early car loans did come with a credit check.
Today, the buy here pay here market offers no credit check options. Buying a car this way is mainly beneficial to the person that either has not built up any credit history or for the consumer that has a poor credit history.
An example of someone that has no credit history would be a young person such as a high school graduate who needs a car to commute to their new job. Because they have never bought anything on credit, they cannot get a car loan.
An example of poor credit might be a person who has run into financial hardship due to high medical bills or such. They have fallen behind on his or her other bills over an extended period and missed some payments.
With the No Credit Check dealership business, the dealership carries the loan on the vehicles they sell.
This means that you make each month’s payments directly to the no credit check dealership. Your payment does not go to a major finance company or bank. This is why they do not have to run credit checks to offer you a loan.
Many car lots offering no credit check in-house financing, create special finance companies just for their businesses. These loans carry much higher interest rate than a typical car loan, and you may be required to make your cash payments in person each month.
Some in-house financiers offer online payment systems and other options, such as automatic debit payments.
There are also some new car dealers that have buy here pay here options for their used car selections but will require a credit check to approve your loan. Most times these cars have previously been traded in for a newer model and the dealer has inspected the cars and has performed any maintenance that was found to be needed before reselling.
These in house car loan dealerships will still limit the new cars to credit check financing customers only.
No Credit Check vs. Car Loan Advantages
There are many advantages of purchasing a car with a bad credit auto loan that differ from a dealer that offers a no credit check loan.
First, it gives a person the opportunity to build or repair their credit history. But only if that lender reports your car loan to improve your credit history. This is practical for the first auto loan for a young person just starting out that has no credit history. It gives them the chance to build that credit history. This is also practical for the person that has been hit with a life-altering experience and have dropped to a subprime credit rating. it will help them build their credit score back up.
The second advantage of this option over no credit check loans is that usually the loan repayment terms are structured differently than a traditional loan. For example, the length of the loan could be longer which could give you a lower monthly payment.
A third advantage is that many times the dealer will sell and finance the car from their lot. The dealer/ lender only require the proof of income from the buyer. That is all that would be needed to qualify for the loan.
Another advantage is that this may be the only option for you at this time. If you have no credit history, it will be difficult to get a vehicle loan. After you have made some payments and gotten your credit rating up, you can qualify for auto refinancing quote for lower payments.
Buy Here Pay Here Disadvantages
Unlike loan dealerships, you will be limited to shop in person from one lot to another looking for financing with no credit check dealers only.
When you obtain financing for a large purchase such as a vehicle you probably try to make the regular payments on time and in full to build your credit rating. If you purchase your car from a Buy Here Pay Here lot or a dealer who offers no credit check car loans, you will not be helping to rebuild your credit. Your good payment history is usually not reported to the registered credit bureaus.
Bad Credit Auto Loan dealerships or auto loan lenders can be found online. By using a loan broker like Valley Auto Loans to match you to the best car loan, you will have your loan approved in-hand, and can shop at any dealership you like.
No Credit Check & No History
No credit check car loans remove the history about how likely the borrower is to repay the auto loan. As a result, the finance lender needs to treat everyone as if they were an extremely risky borrower.
Everyone who applies for car loans with no credit check will get the worst possible loan terms. The interest rates on such auto loans will be the highest in the market. The lender does not want to run the risk of having to repossess the car with no profit. Also, there is the danger of losing the car, and the uncertainty of not being able to trust the borrower.
First-time car buyers with no credit are trying to build a credit history.
Many no credit check car loans will not help them build credit or improve their credit score.
Long Term Costs
The bad thing about no credit check car loans is you will be paying extra high rates for the duration of the loan because they charge more to compensate for the additional risk your loan will carry.
Many of these lots also carry out security measures to guard against people who may “skip” with the car. For example, no credit check dealers often install a remote control device that they can use as a GPS tracker to find the car.
They can also disable the car’s ignition from a remote location. If you are late on a payment, you may find yourself walking to work or taking the bus until you can get the amount in question squared away.
Because they are taking a greater risk in financing the vehicle, they will usually charge a higher price rate than the traditional lenders will charge. Because of this, the buyer will pay more for the automobile over the full term of the loan than they would with a conventional loan and vehicle of the same value.
Another disadvantage is that the used car dealer may take older cars in as a trade that a traditional auto dealer would not consider taking and then sell them to people that have bad credit and can’t get a car loan.
Generally speaking, used car dealers that offer in-house financing with no credit check, obtain their inventory from attending car auctions. Many of the cars available are reliable and dependable, but often the cars are only cleaned up, and the engine and drive train are not thoroughly inspected and repaired, and there is no warranty.
This puts you at a definite risk of buying bad quality cars. Many of the security measures make it possible for them to offer a car loan without checking a persons credit history.
Effects on Your Credit History
If you have no credit or poor credit history, getting a car loan paid off is a way to bring up your credit score. However, for car loans without credit check policies, the lender does not report the transaction and its history to the appropriate credit authorities. 2
As a result, despite all the hard work of paying off the loan in full at max interest, the credit rating will not change. The borrower will not be able to improve their credit score. Paying off the loan is an uphill battle due to the poor terms, but the loan does not enter their credit history.
Yes, the credit bureaus will not know the loan ever occurred. Even though the borrower managed to pay off a very expensive auto loan, the auto loan will not affect their true creditworthiness.
Next, car loans are not just a way to own a car. They can act as a bridge to other loans, such as home mortgages, student loans, or credit cards. Credit bureaus are improving the way they look at auto credit.
Most dealers and auto lenders use something called an auto option credit report. This report can even give them a credit score that is different from the one you thought you had. However, because no credit check loans and BHPH loans never enter a credit report, it cannot improve the borrower’s credit score.
No credit check car loans will also require a larger down payment than any other auto financier.
The reasoning is that the lender does not know if the borrower will be able to pay back any of the loan at all – they could default on the first payment. That would force the lender to repossess the car right away. To repossess a car is an expensive process.
No credit check car dealers and lenders need to set the down payment large enough so that it can pay for the cost of that repossession process. Otherwise, the auto lender could take a loss on the loan.
The down payment needs to cover that risk and provide the bank and dealer with some profit if the down payment is the only money the vehicle lender will ever receive from the customer or borrower. High down payments are always associated with car loans for people with no credit.
“No credit,” car loans can rebuild your credit rating, but it must be done with a reputable no credit car loans company.
Build Your Credit
The credit check loans, while irritating and embarrassing to customers, is an important part of the auto loan qualifying process. Credit checks let the auto lender know how creditworthy the borrower is. 3
This information then affects how the lender structures the loan. The interest rate, down payment, and length of the loan all depend on the credit score of the borrower and their personal finances. However, bad credit car loan lenders look closer at the borrowers ability to pay back the loan and not so much, his or her credit score situation.
Your credit score is used for any loan, but especially so for auto loans, which are some of the largest loans, any consumer will take out. Car loans with no credit check give the lender nothing to base your interest rate and down payment on so they will charge the maximum amount possible.
If you are shopping for cars with no credit check, chances are, you believe that your credit is not good enough to qualify for a conventional car loan. The problem may be that you are not looking for the correct auto loan lenders for your loan.
Valley Auto Loans will match your credit needs to the proper bank so you will get a practical loan for no credit financing, or even if you have enough credit for credit check loans. This will also allow you to shop for a car at any lot you choose so you are not left with only taking a car that someone with bad credit can qualify for.
Many no credit applications are excepted daily and reviewed by our lenders to find the best possible auto loan for the applicant.
You could also pre-qualify with bad credit for your loan, so you know how much money you have to purchase with. This will ensure your loan approval for any of your car choices. The process for a person to get pre-approved today is a very quick and easy process.
They also can assist you to refinance your auto loan with bad credit. If you need to lower the payments or access the equity you have in the car for other expenses you have, refinancing online is a good option. There is no application fee, and there is no obligation.
Our “How can I lower my car payment if I have bad credit” page can answer any questions you may have about refinancing your auto loan to lower your car payments.
Advantages of a Traditional Loan
When you get a traditional loan with bad credit, you will likely have the option of making your payments online, through the mail or even over the phone. You may also have the option of setting up automatic debit payments if the finance company offers the service.
Also, with a traditional loan, your payment history is reported to one or more of the three major credit reporting agencies.
As you make your regular and on-time payments, your credit rating improves over time. Paying off the vehicle gives your credit rating a big boost. Explore traditional financing options before settling for a We Finance establishment.
Many times, college students will consider a no credit check auto dealership that promises to approve everyone because of their lack of credit history. It may get them a car but will not help them establish good credit.
Locate the car you want, and then request a loan online at Valley Auto Loans. We specialize in matching consumers with less than perfect credit with lenders who offer them excellent financing options.
Loan Requirements Are Easy
Most of the time, the loan requirements are easy. First, expect the seller to require you to have a valid driver’s license. If you do not have one, they will not even consider going forward with the sale of a car. They will also require some proof of income and steady employment, such as a recent pay stub.
They may also require a minimum weekly take home amount from that source of income. Many bad credit lenders will want you to make a minimum of $2,000 a month. For some people this is difficult.
Our lenders offer some programs for low-income car loans that will approve someone with a gross monthly income of $1,500 a month or more.
They will usually require proof of residence, and will not accept a P.O. box. They will require it to be a physical residential street address. Once the sale is made, they will also need insurance that would cover the cost of the car if it is involved in a wreck.
Should You Choose This Option?
We would recommend that you do your research before you choose this option. Don’t just assume that you cannot get a traditional loan. We would recommend that you apply for subprime loans first, and then you could be approved even for first-time car buyers.
You will be able to fill out your auto loan application and get your credit check online to be pre-approved. Subprime, bad credit loans for cars are looked at differently than credit card loans by the credit bureaus so check your credit score annually to see your auto credit ratings.
Remember that a bad credit auto loan lender looks closer at your job status and residence than your credit score, debt or credit profile. It is important to fill out the application as accurately as possible and don’t leave any application fields blank.
You will improve your chances of getting accepted if you have a steady income for at least the past year and the car loan is over $7,000.00. A bad credit auto loan will rebuild your credit over time. If you find out that you are not accepted after you have applied, then maybe a buy here pay here loan is the only option for you, but your goal is to get a car and rebuild your credit.
What are my best options when it comes to personal loans vs car refinance? We can show you a real life example of which is better in the long run.
A Better Choice
The bottom line on no credit check car loans is that they add several additional costs and remove many benefits compared to a conventional auto loan and are a better choice.
Even someone with bad credit would do better going the traditional route and taking out an auto loan through a lender that will perform a credit check. Credit checks are much easier and less invasive to perform now than they used to be.
They do not even need an in-person appearance, which removes the embarrassment of public rejection. Just fill the application out online.
At the very least, a loan that requires a credit check will appear on the borrower’s credit history, so paying off the auto loan on time will go a long way toward repairing your credit.
Valley Auto Loans specializes in lenders extending credit to borrowers with poor credit scores through connections to financial providers and other institutions for that purpose.
This eliminated the need for in house financing and provides you with the best possible financing options. We know that difficult situations can damage a person’s credit, even when they are acting responsibly. Sometimes they cannot have total control of their financial status. Lucky for you Valley Auto Loans cares about your financial needs, But it does not stop there.
When no credit car loans seem to be your only choice, turn to Valley Auto Loans. We will search for the best auto loan institution that will provide a loan for you and, in turn, will begin the process to repair your credit score.
Experience and dependability give us the ability to offer fast and safe car loans for all, so nobody will pay more than he or she should for a monthly payment or the down payment.
Valley Auto Loans can find a lender for almost every credit check loans applicant. This is valuable not only to those with bad credit but to credit challenged people who are just starting out on their own and don’t have any credit history at all.
Approval is fast; there is no application fee, and there is no obligation.
Many auto loan lenders are reserved to take a chance on such untested consumers, but we are confident that we can find you an approved auto loan or lender willing to offer you an auto refinance. Also, you will not be limited to just “no credit car dealerships” or those only offering cars for people with bad credit.