No Credit Check Car Loans: A Better Alternative
You may have seen lenders promoting "No Credit Check Car Loans" and "Guaranteed Approval", but is this really true? Or is this another marketing ploy? Let’s find out!
If you're searching for a no credit check loan with guaranteed approval, the chances are, you believe that your credit score will hold you back.
While no credit check loans are possible, it's important to know that for every credible offer you get, there are another ten sharks waiting to take advantage of your situation.
Why lenders need to check your credit history
When you apply for a loan, whether it be a student loan, credit card, auto loan, or mortgage, you consent to have your credit report checked by a lender.
When a lender pulls a copy of your credit file to see if you’re eligible for a loan, they’re checking your credit history to see if you’d be a respectable candidate for the loan that you applied for.
Lenders want to ensure you’ve got a good handle on your finances and that you can afford to honour your debt obligations.
When you're viewed as high risk to banks and other traditional lenders:
- your interest rates will rise
- you'll be asked for collateral or a cosigner
- you'll be asked for a larger down payment
- you'll be declined
As a vehicle retailing and auto financing company, Canada Drives often consults with Canadians who are curious about getting a car loan without having to get their credit checked.
Although it is possible through some institutions, the lenders that promise no credit check car loans drastically increase interest rates with high down payments and monthly payments.
With lenders who don’t check your credit for a car loan, you’re likely to pay thousands of dollars more than what you would if you were to apply for a car loan with a credit check.
If you have bad credit, there is a better alternative to no credit check loans with “guaranteed” approval.
Thanks to the emergence of financial technology, a growing number of lenders are now able to approve applicants based on information beyond just a credit rating.
Credit inquiries can be bundled
If you're looking for a no credit check loan because you are worried about dinging your credit score with a hard inquiry (or multiple hard inquires), you'll be happy to know that credit checks for car loans can be bundled.
But what does this mean?
Typically, when a lender or company requests to see your credit report, this is what’s known as a hard pull or hard inquiry.
This activity will cause your credit score to drop by a few points.
However, there is a rate-shopping window that lets you shop around for the best available rates without damaging your credit history with each loan application.
The credit bureaus—Equifax and TransUnion—both have an auto loan rate-shopping window of at least 14 days.
During that time period, you might think that multiple car loan applications with various lenders will result in multiple hard inquiries, and consequently, a badly damaged credit score.
In fact, all of these inquiries will only count as a single inquiry.
This is significant because many people think that every inquiry hurts their credit score but they won’t if you make all of your inquiries inside this 14-day window.
Get pre-approved today (even with bad credit)
At Canada Drives, we understand that many Canadians need cars regardless of their credit rating.
If you don't know what kind of financing you qualify for, an online pre-approval is an easy way to find out. Getting pre-approved with Canada Drives takes a couple of minutes, and is a soft inquiry so it will not hurt your credit score.
Get pre-approved today to see what you might be eligible for and enjoy access to hundreds of certified vehicles!