At first glance, no credit check car loans seem attractive. The idea of getting approval regardless of one’s credit standing is appealing to car buyers here in Atlanta, particularly those with imperfect credit or no credit. However, there is more to no credit check car loans than the absence of credit checks. If you are interested to take out such loan, take some time to understand what comes with such an enticing offer before you apply.
With no credit check car loans, you get quick money for your auto purchase. Because the lender will not be conducting a credit investigation, you don’t have to wait long for approval. More often than not, the credit check is that which makes the loan approval process tedious. The lender has to pull out your report, peruse it and decide whether or not you should be given a loan based on the report details.
With this kind of loan, the lender is not concerned with your credit situation. As long as you have a good source of income and/or money for a down payment, you will get approval. In some instances, sources of no credit check auto loans also require borrowers to have a co-signer.
Creditors take a huge risk by lending to individuals who have tarnished credit or no credit at all. To protect themselves from potential losses, they charge higher interest. Sources of no credit check auto financing can ask as much as 15 percent. Naturally, with higher interest comes higher monthly payments. If you are already in a financially difficult situation, high car payments can get you in further trouble.
Another way lenders protect themselves from losses is by asking for a sizable down payment. Some lenders ask as much as half of the vehicle’s purchase price as a deposit. As a car buyer, you are encouraged to give a hefty down payment for a financed auto purchase; however, if you are asked for that much money and you do have it, you are better off paying cash for a used vehicle.
No credit check car loans are often offered by ‘buy here, pay here’ lots. There are instances when a third party creditor grants the loan, but the car lot is usually the one that extends credit to consumers. The main problem with ‘buy here, pay here’ dealers is that many of these don’t report to the credit agencies. Every car payment you make to the dealer will not be recognized by Experian, Equifax, and TransUnion. This is unfortunate because repaying an auto loan is one good way to rebuild or improve your credit.
Lastly, the main problem with no credit check car loans is that most of them are scams. There may be legitimate lenders that offer these, but others are just out to get your money. Those offers that are too good to be true are often traps. One warning sign you should watch out for are upfront fees—if you are being asked to pay a certain amount to process your loan, you should immediately choose another lender. Another sign is the request of personal information, particularly your Social Security number. You should be suspicious if they don’t check your credit but ask for your Social Security number. Don’t let yourself be a victim of identity theft.