Do no credit check auto loans really exist?
Yes they do. The reality is, some consumers have very little credit, and that is where subprime loans come in. There are plenty of these companies out there. They only deal with customers with bad credit.
Will they work with anyone?
No, you still have to meet certain restrictions. For instance, you have to prove you have enough income to pay it back. You have to show you have steady employment. If you just got the job yesterday, there is a good chance you will not get approved.
What will the interest rate be?
It depends on the company. Just realize it will be much higher than the industry average.
How long do you have to pay it off?
The terms for bad credit loans are generally shorter. The max is usually three to four years. Moreover, if it is a used car, the terms will be even further reduced. You can get subprime financing even if you are buying through a private party. You will just have to find your own subprime lenders, as opposed to going with the dealership. In addition, it might be cheaper for you to do this anyway. Remember, in many instances you can save money by finding a lender online, instead of using the finance company the dealer uses.
So how are you accepted?
That is the hard part. Even subprime lenders have limits to who they will lend money to. Fortunately, there are some steps you can take to dramatically improve your odds of being accepted. Here are three of the best:
#1) Pay a big down payment
With poor credit, the amount you can get for the loan is limited. Therefore, if you are looking to buy a four thousand dollar car, try putting one or two thousand down upfront. This shows the company you are serious about paying back the loan. If you are not willing to put any money down, you are less likely to stay on track with your payments. In addition, your monthly payments will be less. The principle, after all, is at least one or two thousand less. Therefore, the total amount you pay will be greatly reduced. If you have some savings, try to do this.
#2) Get a home equity loan
The main idea here is to lower the amount of danger to the lender. Obviously, you will already have the vehicle as collateral. This just provides further insurance. It might seem risky. However, as long as you know you can make your payments on time, it is really not dangerous. Do not do this unless you have already been denied a loan with just your car as collateral.
#3) Get a co-signer
Obviously, having someone else backing you just provides another layer of protection to the lender. However, make sure whoever is signing with you has a good credit score. Otherwise, they are not going to do you much good. As with any loan you are considering, the most critical step is to plan before you take action. Do not over-think it. However, at least know how much you can afford to pay. If you do not, your payments might be more than you can handle. Figure out your monthly income and expenses. Whatever is left over is what you can safely afford on your car payment.
Do not be overly optimistic. Otherwise, you might find yourself working sixteen hours a day just to make your payments on time. No credit check auto loans can be a great deal, but only if you know what you can afford to take on. You do not want to be burdened with payments you really cannot handle for the next four years.