Owning a car is one of those things that you either take for granted or have a desperate need for. If you live in a larger city, having a car may not seem useful all the time. Most of your time traveling will probably be spent either on foot or in the subway. Depending on your job, you may need a car, even if you live in the city, especially if you are an entrepreneur who needs to take his equipment on the road.
If you live in a more rural area, having access to a functional set of wheels becomes a necessity. Public transport may not be available, and a commute for groceries can easily be an hour’s drive away. If your credit is good enough, you should be able to get a car loan without too much issue.
But, if you are in a much worse position credit-wise, you may need to look for another way. Maybe you are in a situation where you have either bad credit or zero credit. Do read on, as we will explore three companies that can help you even in these situations.
As the name implies, no credit check or bad credit auto loans are provided to you independent of your credit situation. In other words, the credit they are willing to provide to you is not based upon credit history. Usually, if you have either bad credit or no credit, the majority of traditional lenders will not be willing to offer you a loan.
As a result, no credit check car loans can also be pricier, but they do afford you the option of acquiring a car when you might struggle to pay for it otherwise. So, if you are in a situation where you need a car but fear your credit score may complicate matters, keep reading for our review of three companies who provide loans in spite of poor credit.
Since the world of finance can be tricky, it is perfectly understandable if you do not know where to start looking. Naturally, we will give you the essential information on the following providers; however, we will also give you a guide on getting qualified for a bad credit loan yourself and also answer frequently asked questions regarding no credit check auto loans.
Here is the List of Best Car Loans With Bad or No Credit
- Auto Credit Express – Best Overall for Car Loans
- Car.Loan.com – Best Loan Offers for Bad Credit History
- myAutoloan.com – Best for a Quick Car Loan(within 24 hours)
So, Where Do I Look If I Have Bad Credit?
It took some time but after researching, we found the three best auto loan companies to start your auto loan search with. These three companies will help you obtain a loan without a credit report check. Additionally, all three have good reputations and can help you get a loan regardless of your credit situation.
Even if you have a credit history with instances of collections, repossessions, or bankruptcy, these services may still enable you to get a new set of wheels. Depending on your situation, different companies may work better for you. A quick look at the bullet points we give you will tell you most of what you need to know. But we will, of course, also explain things in greater detail underneath.
Auto Credit Express specializes in serving customers who are dealing with issues such as no credit, bad credit, repossession, or even bankruptcy. They were founded in 1999 and have been in business for over 20 years. To date, their network of dealers’ partners has financed $1 billion in car loans, specifically for customers with bad credit scores.
Out of the three companies we looked at, Auto Credit Express came out on top with an overall rating of 4.9/5.0 stars.
The average length of the application process is only around 3 minutes. Their typical interest rates range from 3.99% to 29.99%. They also have a fantastic reputation score of 9.5/10. In short, they are an all-around solid choice to consider if you need help financing your car.
The best part about Auto Credit Express is the speed at which they can help you. In 30 seconds, they can pre-qualify you to get started without a credit inquiry. So, if you need a car urgently, you may want to seriously consider applying with them.
You will need to have some information ready to apply, such as your monthly income, monthly mortgage payments, rent, and any garnishments you may have. Finally, you must also include payments you make on your credit card and any payments you make on loans.
Once you have filled this in, you will be notified of any loan offers extended to you. You can then apply for financing via the website.
Auto Credit Express, as a company, is a member of the Internet Brands automotive group. Working in tandem with its network of partners consisting of dealers and auto lenders, the company has helped customers with poor credit scores get financed to the tune of $1 billion.
One note is that applicants with bad credit have to make at least $1500 per month.
- Fast application process
- No additional fees
- Large network of lenders
- Good for bad credit applicants
- ‘Excellent’ rating on Trustpilot
- Monthly income of $1,500 required
Car.Loan.com started doing business in 1994 and has been in business the longest out of the three companies we reviewed. Overall, we gave the company a rating of 4.5/5.0 stars. Generally, it will take you around 3 minutes to get through the application process.
Their interest rates tend to vary, but if you have an issue with a subprime credit rating or are a first-time buyer, you may want to consider this company first.
As a car financing company that specializes in providing bad credit auto loans to consumers who have a troubled credit history, Car.Loan.com can also help you if you do not have any credit history. They also offer services to get financing for a car loan if you have previously declared bankruptcy. To get started, you only need to fill out their no-obligation request form.
This application process should only take you about 3 minutes, so it should not take you long to figure out if this is something that will work for you. Since there are no fees attached, there is no reason not to at least try it out.
Car.Loan.com is also a member of the Internet Brands Automotive Group, and they will use their partner network of lenders and dealers to find you a match on your car loan request. The best part? The company does not charge a fee for using their matching services, and they may help you get same-day approval for your auto loan.
- Excellent for bad credit or no credit applicants
- Free, no-obligation applications process
- No additional fees
- Interest rates may be higher
myAutoloan.com is owned by Horizon Digital Finance and has been operating since 2003. They offer varying interest rates and have a quick application process of only around 2 minutes. We gave this company 4.0/5.0 stars in our review. If you are looking to get your car refinanced or are just looking to see what financing options may be available to you, they are worth checking out.
Via their website, you can apply for both a new or used car. They can also help you with refinancing and offer services for lease buyouts. They can also help you finance a private-party purchase
Their services can provide you as many as four offers from their lender partners, so you are not restricted to just a single offer. Their national network of lenders will give you plenty of options. The myAutoloan.com website has a unique feature that shows you the lowest APR rates daily for different loan types. They also offer interest rate and online payment calculators.
After entering your information and submitting your application, you could receive a message of approval in the span of a few minutes. Your lender will then work with you to provide you funding in as little as 24 hours.
- Up to four offers in minutes
- Fast approval process
- Offers auto loans, refinancing and lease buyout
- Works with low credit scores
- Must make $21,600 gross yearly income for most loan types
- Not available in Alaska or Hawaii
What Do I Need to Do to Get a Loan?
In general, you would need this type of arrangement only when your credit history is either bad or non-existent. Having either a bad credit score or no credit at all certainly does make it harder to qualify. There are things that you can do that will give you a better shot, however.
The following are the four main strategies that can be used to better your odds at getting an auto loan. This does involve a bit of number crunching, but we will make sure to explain everything so that it is clear.
When it comes to the world of financing, most lenders will have minimum set requirements for your monthly income. However, your income does not have to come from a single source, and many lenders will accept most forms of income.
This means that income streams such as money from alimony and child support, benefits from Social Security, and any disability payments or state assistance all count toward your total monthly income.
The lender can decide to set what is called your maximum debt-to-income ratio, or DTI. This ratio consists of whatever you pay for your debts every month divided by your gross income. In simple terms, this ratio gives you the percentage of your monthly income that has to go towards monthly debt payments.
The ratio itself is expressed on a scale from 0 to 1. If your DTI is 0, it means you have no debt payments to make, and if your DTI is 1, it means all of your monthly income is consumed by debt. Most likely, your DTI will fall somewhere in the middle.
For example, let’s say you have a total monthly income of $2000 and have a monthly debt payment of $1000. Your DTI ratio would come out to 0.5, representing exactly 50% or half of your income. Now, 0.5 is quite high for a DTI as half our income goes towards paying off debts. If instead, our debt payments were only $200, our DTI would drop to 0.1 as only 10% of our income would go towards paying off debts.
Lower is better in this case. Having a lower DTI makes you appear more credit-worthy, which would help you facilitate a loan in general, but this same principle still applies to loans without any credit inquiry.
If you pay more of the total cost upfront, the total sum you will have borrowed will be smaller. This is common sense, but what it also does is make it so you will have a larger share of equity in the car. To the lenders, this shows that you have been motivated to not have the car be repossessed.
This is also one of the main factors that these lenders will consider when deciding your interest rates and signing off on your loan. You want the lender to know you are taking the car loan seriously, so showing commitment will help you convince them of that. In short, paying more upfront shows the lender you are taking the loan seriously, which will allow them to be more lenient when making a deal.
- Have Someone Else Co-Sign
Co-signing means having someone with better credit agree to share responsibility with you for the loaned amount. Having another person on the contract means the lender is not placing all of their trust in you, but rather in you and your co-signer as responsible parties. Since the lender has less risk, they are less likely to be wary of bad credit.
Getting a co-signer will significantly help you in getting your request for a loan approved. It is the job of the co-signer to make payments in case you don’t. You should remember that having someone else sign the loan with you could potentially cause conflict between you and them if you were to be unable to repay the loan. It is therefore always advisable to alert your co-signer immediately if there are going to be any issues from your end.
- Pledge Additional Collateral
It is true that while whatever car you have bought already counts as collateral, you can put other possessions up as collateral too. Doing so improves your chances of getting the loan approved.
Think of things like the equity in your home, any cash you might have in a savings bank account, bonds, stocks, certificates of deposit, and other general assets. These are the types of things lenders might expect you to submit as collateral. Simply put, if you show that you are willing to risk losing something of value if you fail to make payments, the lender’s perceived risk is decreased, and they are more likely to approve you.
Lenders will often make the distinction between secured loans and unsecured loans. By pledging additional collateral, such as your home equity, lenders will consider the loan secured and are more likely to approve it.
Do remember that by pledging additional collateral, you will also be putting that same collateral up for forfeiture if you fail to meet the required loan payments.
When it comes to getting a loan with bad or no credit, using these strategies should significantly improve your chances of getting the car you want. While using just one of these strategies should improve your chances by itself, nothing stops you from employing more than one at the same time, increasing your chances even further.
There is also the upshot that by completing this first loan successfully by employing these strategies, you can build up even better credit so that your next loan will be easier.
Which Company Should I Choose if I Have Bad Credit?
Out of the three companies that we reviewed, Auto Credit Express scored highest on our list. Having said that, both Auto Credit Express and Car.Loan.com are part of the Internet Brands Automotive Group. This means they offer many of the same services; however, depending on your situation, you may prefer one service over the other.
There is one crucial distinction you should understand before making a decision. Namely, you should understand the differences between lenders and matching services. The three companies we have discussed are all services which connect you with car loan providers. They are not direct lenders themselves. Instead, they connect you to a direct lender.
The direct lender is the person with whom you take out the loan. That means that these companies bear no responsibility for what deals you may be offered, which would come from their network partners. That means that the platforms on this list cannot force their partners to deal with you, nor do they influence the loan terms or rates offered.
The value these companies provide is one of convenience. All it takes is filling in a single form before you are connected to their network, thereby giving you access to potentially dozens or even hundreds of their loan partners. This saves you boatloads of time you would otherwise spend searching around for offers yourself and makes sure the offers you get are from credible lenders.
Of course, these platforms offer competitives rates to bring you the best deal possible in your current situation. This is another reason you will often get the best deals by employing these companies. This way, you significantly increase your chances of getting the best possible deal regardless of your credit situation.
Still, you should not just go out and sign up with any random loan matching service. Doing that is a great way to get burned. A better plan is to evaluate the business based upon two simple criteria. We are looking for businesses that are honest and effective. A simple way to do this is by asking three simple questions.
How long have they been in business?
Out of the three companies we discussed, myAutoloan.com is the most recently established platform. They started their business in 2003, which is still a respectable time to be operating (almost two decades). The reality is that older companies have weathered many storms and can therefore be more easily trusted to be reliable. Shady companies do not tend to last very long before being outclassed by competitors offering a better and more reliable product. So always check the amount of time a company has been in business for and avoid companies with short life spans.
How much business do they do?
Figure out how much money the company has managed to close in deals. A bigger volume of business indicates both good word of mouth and repeat business, two things that only tend to happen when people are satisfied with their experience. It also shows their experience in the handling of finances. From the businesses discussed, we rated Auto Credit Express and Car.Loan.com, which reported $1 billion in loans, as the best. In short, avoid businesses that hardly do any business because there is probably a reason for that.
Do they get good ratings?
A fairly obvious question, perhaps, but ratings can tell you a lot about a company and how they conduct business. Unreliable or dishonest companies tend to attract bad ratings. It is also good to make sure the rating agency is legitimate. You can check out the ratings given by the Better Business Bureau for an A+ rating or look on Trustpilot for an ‘excellent’ rating.
When we write our reviews, we make sure to consider all relevant factors, including, but not limited to, those named here.
What if I Have Credit Score Issues and I Cannot Make a Down Payment?
You can still get financed without a down payment. When you add bad credit, matters do become more complicated. However, lenders make their money by finding closing deals on loans, so they are incentivized to get you a bad credit auto loan.
Still, lenders must balance this potential income against the potential of the loan going into default. If this happens, the car will be repossessed. Everyone involved would rather avoid this situation. As such, credit scores can be evaluated for risk so that the lender can adjust their rates.
When we talk about credit score categories, there are three important ones to keep in mind. These are credit type, perceived risk, and credit score. Your credit type can be seen as a general label that is placed upon your credit score. Then depending on what label your score gives you, you are placed in a particular category of perceived risk.
So, your credit type determines your risk, which determines your rates. There are five credit types and perceived risk levels, which correspond to certain ranges of credit scores. One thing to note about credit types is that two different naming conventions are often used for the same category. From top to bottom, these are Excellent (or superprime), Good (or Prime), Fair (or Non Prime), Poor (or Subprime), and finally Very Poor (or Deep Subprime). If your credit is in the range between 781-850, your credit score is considered excellent, and you will correspondingly have the lowest risk.
Good scores carry low risk and have a range of 661-780. Fair scores range from 601 to 660 and will carry moderate risk. If your credit score is in the range of 501-600, you will have a Poor credit type and will be considered high risk. Finally, if your credit score is in the 300-500 range, your Very Poor credit type will leave you with the highest possible risk. Generally, you can expect the higher risk to often come with higher interest rates.
However, there is no reason to stress as we have gone to great lengths to research the best car providers for those with bad credit. The good news is that they do have deals that do not require any upfront payments. So, say you are unable to pay ahead, these companies may still be able to help you out. Still, if you forego a down payment, they could ask you to agree to other conditions.
In our research, we have found that these conditions may include:
Using an automatic payment method: In some cases, the lender may insist that you automatically deduct payments from the checking account. This will give them more confidence that the payments will arrive on time. However, do keep in mind that in some cases, lenders will also want you to have a checking account with an option of overdraft coverage.
Higher interest rates: We found that in these situations, interest rates will often be over 20%
A tighter payment schedule: Instead of monthly payment, lenders may require you to make bi-weekly payments. More consistent payments will decrease the risk the lender takes. Sometimes, they may even require weekly payments. These would then be tied to your pay schedule directly.
Having someone else cosign: If you have someone who is creditworthy willing to cosign, this will improve your odds. Especially if they have good credit, you are much more likely to be approved. This allows the lender to feel more secure in granting you the loan for the car.
Go for an older or used model: The more miles and the older the car, the less it will cost. This also means that dealers have more incentive to try and get rid of these cars. A car just standing around rusting away is a net loss for the dealer, so to avoid that, dealers tend to be more eager to offer deals with these cars. Now, that may mean that you will not be getting exactly what you had in mind. Still, if you then make sure to make all payments on that car and get paid on time, it demonstrates responsible behavior and will raise your credit score. You may have to play the long game in this way so that you can get the financing secured for next time. Then, once you have access to cheaper credit, you can more easily get the car you want.
Paying off other debts: Sometimes, a lender will have doubts about offering you a contract due to your outstanding debts. In that case, they may decide to provide you with a loan on the condition you first pay down your other loans and debts. This works as a show of good faith and shows that you are reliable. Debts to pay off include things like credit card debt and other outstanding loans.
Again, you are not limited to picking only a single one of these. If you can apply more than one of the strategies, you will increase your odds to get financed.
What if I Have Zero Credit History?
So far, we have only discussed what you ought to do if you have bad credit. This is a different situation from having no credit history at all. There are many reasons why you may not have a credit history. Often younger people (such as students) have not had the time or opportunity to build up any credit history.
Maybe you just do not like the idea of having any debt at all and have avoided it for that reason. This is different from having bad credit, which you get due to unfortunate financial actions. Collections, defaults, bankruptcies, and delinquencies will cause you to build up a bad credit history. Having zero credit history, lenders have nothing to look at that would have them reconsider offering you a loan.
Nevertheless, having no credit history may still require you to take some extra steps. While it is true that the lenders have no reason to believe you will default on your debt, you also have no history of making such payments to point to. The lender might then require you to take some remedial steps, like having someone else cosign a loan with you, going for an older call, pledging other assets, or even making a large down payment.
So, let’s say you are a student and have not had time to build up a good credit score yet. One strategy to pursue is to go and get yourself a credit-building credit card or a “secured credit card.’ These cards require you to pay some cash to open the account. The paid amount then becomes your credit limit; therefore, if you were to default on the balance, the lender already has your cash collateral to offset their loss. These accounts are typically found at banks, though credit unions will have them sometimes too.
The important thing is that the credit line this card provides cannot exceed the actual money on the account. Since you can never take out more credit than is in the account, even if you fail to meet a payment, the money already in the account will fully cover any delinquent payments.
As always, the best way to build up credit via a card is to make sure you always make your payments on time. If possible, it is also recommended that you not carry a balance because this will help you to raise your credit score faster. One important thing to keep in mind is that you should check whether the company will report your payments to at least one credit bureau. The three bureaus are either Experian, Equifax, or TransUnion, and these institutions will be the ones registering credit.
Another option you have is to open an account allowing you to build credit. These are found at most banks, credit unions, and other online platforms. So, you should have no problem finding a place to open one of these. When you open a credit-builder account, you will first be given your first loan. This loan is then deposited into either account that is locked or in a certificate of deposit.
You are then meant to make your payments per the schedule which, of course, you should do. After you have finished paying off the loan, the account will become unlocked so that you now have access to the funds. Doing this will build up your credit history and enable you to get financing more easily.
If your payments are not being registered, they will not affect your credit score, and it will not improve. So, make sure to check up regularly on whether everything is going through properly. These bureaus will then build up your credit history. Having a good credit history helps you get your car financed and make it so you can get back on the road faster.
Conclusion: Getting Back in the Driver’s Seat and Finding the Best Car Loan for Bad Credit
The three companies we discussed above are all solid choices for auto loan financing. We have found they are prepared to put in the necessary effort to make sure you have access to a car loan without a credit inquiry process.
While there may be other options out there if you are in a tough situation credit-wise, these are probably your best options to get funding for a vehicle. Besides, if you play your cards right and make sure that all the payments are made on time, you will build up credit by working with their networks of lenders.
The best way to look at these types of loans is as an opportunity. First, you get the benefit of having a car again. This is already a good thing, but the fact that it also allows you to improve your credit makes finding a loan an all-around smart financial decision.
Improving your credit score means that, when it is time for a new ride, you should have access to better credit with more relaxed stipulations and lower rates. Now, armed with this new information, you are on your way to getting the car that you want.