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, chances are, you have bad credit and want to get approved, or you're trying to avoid getting dinged for too many credit pulls. While it is possible, it's important to know that for every credible offer, there are another ten sharks waiting to take advantage of your situation.
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, it’s called a hard pull, and they’re checking your credit history to see if you’d be a respectable candidate for the loan that you’ve applied for.
Lenders want to ensure you’ve got a good handle on your finances and that you can afford to pay back your loan. Otherwise, you’re viewed as a risk to lenders, and one of four things will likely happen next:
As an auto financing company, Canada Drives has consulted with Canadians who are curious about getting a car loan without having to get their credit checked. Although this is possible through some third-party lending institutions, the lenders that promise no credit check car loans drastically increase interest rates with higher monthly payments.
With third-party 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’re hoping to get a new car loan without having to consent to a credit check, remember the following tips before you start to inquire with a lending institution that promises no credit checks with “guaranteed” approval.
Often, people who search for no credit check car loans are hoping to avoid high-interest rates due to their already poor credit. Or they’re afraid that a hard pull to their credit report could damage their score. It’s easier now more than ever to get approved for a car loan with great rates, regardless of your credit situation. Today, some lenders in Canada specialize in helping applicants with a low or no credit score, and Canada Drives partners with the majority of them.
Canada Drives also partners with hundreds of car dealerships in Canada that can help people with all types of credit scores get driving in vehicles with affordable monthly payments and low interest rates. With tons of new lenders on the market ready to help those struggling with their credit, the hard pull might be worth the few points lost as you’d be saving a ton of money down the road compared to no credit check car loans.
What a lot of people don’t understand is that credit checks for auto loans can be bundled. This means that you can inquire with lenders regarding different financing rates within a short period of time so that your credit score doesn’t suffer. Typically, when you apply for a lot of different loans within a short period of time, your credit score will drop a few points. Although this is true when applying for multiple different kinds of credit at once, if you’re applying for just a car loan, there is a rate-shopping window that lets you shop around for the best available rate without damaging your credit history.
Equifax’s rate-shopping window for an auto loan is between 14 days and 45 days. This means that any hard inquiries made from auto loan applications within the given time period won’t have a negative impact on your credit score, as loans shopped between this time will be taken as a single inquiry. The shorter the period of time that you’re shopping for auto financing, the more likely your credit will avoid a big hit.
Canada Drives works with thousands of Canadians every day to access to the best car deals in their area. Getting approved for auto financing with bad credit used to be difficult, and many buyers choose to pay high fees to get auto finance without a credit check. But Canada Drives connects customers with lenders and dealerships that know how to help ALL credit situations. Apply for FREE today (it only takes 3 minutes!) and see what deals you're eligible for!
Hopefully, this article has demystified some of the unknowns surrounding car loan financing. If you’re interested in learning more, read other articles from our Fact or Fiction series. In one article, we look into cash back car loans to give you the facts, and in another, we provide a comprehensive breakdown of 0% interest financing. We also delve into the details of zero down payments.
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