If you or your business have a low credit score or suspect that you might have a low credit score, one part of the loan application process that might cause you some trepidation is the dreaded credit check.
Lenders will pore over your history in minute, vivid detail to determine whether or not you’re the type of individual they want to trust with borrowing their precious funds, and the entire ordeal can be altogether unnerving.
Alternatively, you can skip this hassle and look for car loans with no credit check. Is it even possible? Conventional wisdom states that you have to have great credit to even be considered for any kind of loan.
The truth of the matter, though, is that there are ways to bypass the harrowing credit check and still obtain a reasonable loan to pay for your next business vehicle. Let’s explore.
Why Do Most Car Dealers Require Credit Checks?
The long and short of it is to make sure that you can pay back the money you owe (plus the interest) on the loan you’ll need for the car. Many times, when you head to a dealership to purchase a vehicle, they’ll “shotgun” an application out to multiple lenders to try to identify several options.
To do this, they’ll need to do a credit check to see if you’ll qualify for the terms that various lenders put forth. The better the credit score, the better the loan offers (and vice versa). Major financial institutions prefer borrowers who will present the least risk, that is, they don’t fall behind on payments and have a very high credit score.
As you might imagine, not everyone qualifies for these loans, and it leaves some potential car buyers in a bind when they aren’t able to finance through many of the most popular options for purchasing a new vehicle. Still, there is some hope in the form of the no credit check loan.
What You Should Know About No Credit Check Loans
The name gives it away, there’s (usually) no credit check required when you go for this kind of loan. If the dealer does check your credit, they will “hand wave” the fact that it is a bit low and offer the loan anyway.
At times, the dealer may not even need to do a background check, and might only require proof of residence and proof of income. Obviously, it’s a good idea to have this information on hand if you plan on going in and obtaining this type of loan.
No credit check loans might also come with the stipulation that you’ll need to make a down payment on the vehicle. The size of the down payment will vary from lender to lender, so be sure that you’ve got some money in savings to cover this.
A larger down payment will help build a greater degree of trust between you and your dealer, and may also help reduce the size of your regular payments, so the rule here is that bigger is usually better.
You might also benefit if you have someone cosign on the loan with you. While it may not be an option available to everyone, it does go a long way in helping to secure this particular kind of loan.
No credit check loans are an option if your other avenues are limited, but you should keep in mind that there are some drawbacks. These loans will come with higher interest rates, meaning that in the long term you’ll be paying more for your car than if you were able to secure a conventional loan.
All-in-all, know that the no credit check loan is there if you need it, but shouldn’t be considered a first option. Anytime you’re interested in a new business vehicle, be sure to shop around and consider all of your options before you commit.
