No credit check car loans- Are they a better alternative?

Many car loans shoppers don’t want to apply for auto finance if they think they might get declined due to bad credit or low credit scores. Without the certainty of approval, they don’t want to waste their time with tedious paperwork if it’s just going to end in disappointment. Fortunately, vehicle finance is more accessible today than it has ever been. 

There are a lot of misconceptions out there that if you have bad credit or no credit you cannot get an auto loan. What we are here to tell you is this is not true. Dealerships and lenders have found that with the ups and downs of the Canadian economy, they need to make auto loans available for good and bad credit customers alike. Canadians are getting more and more auto loans thanks to programs like Auto Providers’ first-ever bad credit car loan program, set up to measure affordability and risk even with bad and no credit customers.

No credit check loans are the next solution, especially if you face challenged credit or a low credit score. Lenders often market “Guaranteed Approval loans” or “no credit check” campaigns, but do they really accomplish the claim? If you are looking out for no-credit-check loans, then possibly you believe that your credit score will hold you back. Let us read on to understand if this no-credit-check loan is merely a marketing campaign. 

Why checking your credit score is important?

When you apply for a loan, whether it be a student loan, credit card, auto car 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 are eligible for a loan, they’re checking your credit history to see if you would be a respectable candidate for the loan that you applied for. They want to establish if you have got a good handle on your finances and that you can afford to honour your debt obligations.

Credit scores in Canada range from 300 points to 900 points. According to Equifax, one of Canada’s major credit bureaus, a good credit score of 660 will likely qualify you for a loan. However, any score of less than 660 might make it challenging to get approved for new credit. Vehicle loans are generally available from a financial institution (bank, credit union, etc.) or a dealership. 

How do Auto Providers help?

Canadians with less-than-perfect credit usually do not get approved for an auto car loan through a major financial institution like a bank because banks don’t typically work with subprime buyers (borrowers with a credit score below 650). Thankfully, some dealerships (like the Auto Providers) are partnered with specialized lenders and dealers to make finance accessible to all Canadians. It has never been easier to get approved for a loan, even if you have bad credit. Our bad credit program was designed to help you rebuild your credit, secure a manageable loan and most of all drive a vehicle that fits your needs. 

No Credit Check Car loans – all you need to know

Although it is possible through some institutions, the lenders that promise no credit check loans invariably increase interest rates with high down payments and monthly payments. With lenders who do not check your credit for a car loan, you are likely to pay thousands of dollars more than you would if you were to apply for a loan with a credit check. 

If you are facing issues with bad credit, there is a better alternative to no credit check loans with “guaranteed” approval. Thanks to the evolved financial technology today, a growing number of lenders are now able to approve applicants based on information beyond just a credit rating. 

Bundling of credit inquiries – If you’re looking for a no-credit-check loan because you are worried about hitting your credit score with a hard inquiry (or multiple hard inquiries), you’ll be happy to know that credit checks for loans can be bundled. This means that whenever a lender or company requests to see your credit report, (typically known as a hard pull or hard inquiry), as part of the loan application process, the activity causes 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 loan applications with various lenders will result in multiple hard inquiries, and consequently, badly damaged credit. In fact, all 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 will not if you make all of your inquiries inside this 14-day window. This allows you to check different lenders and find out the best loan terms for you.

Pre–approval – At Auto providers, we understand that many Canadians need vehicles regardless of their credit rating. If you do not know what kind of financing you qualify for, an online pre-approval is an easy way to find out. Getting pre-approved with us 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. Let us help you rebuild your credit, secure a manageable loan, and find you a vehicle that fits your needs!