How to Get a Car Loan With No Credit Check

Happy man receiving car keys from saleswoman at desk in showroom
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It is possible to get a car loan with no credit check. However, you will likely wind up paying a higher interest rate and have to do a bit more work to secure financing.

Typically, banks and car dealers run a credit check on borrowers who apply for an auto loan. If the borrower has a lower credit score, they're considered more at risk of defaulting on the loan and will be denied credit or offered a higher interest rate.

According to Experian, one of the three credit bureaus, lenders offer the best rates to borrowers with a credit score of 720 or above. Subprime (580-619) and deep subprime borrowers (579 or below) pay average rates of 17.74% and 20.45% respectively to finance the purchase of a used car. These borrowers may also find it more difficult to obtain a loan.

If your credit is in this range, you still have options, however. If you have bad credit—or no credit—a no credit check car loan might be the right choice for you. Here's what you need to know.

What You Will Need to Get a Car Loan

While it's possible to get a no credit check car loan, it's not possible to borrow without providing proof that you'll be able to pay back the debt. The lender will want assurances that you can make the payments on the loan, even if they are willing to take a chance on you based on information other than your credit scores. For example, you will almost certainly have to provide proof of steady employment.

Be prepared to show your potential lender pay stubs from your work going back as far as you can. The longer you have been employed at your present job, the better. How much you are earning will also matter. 

You will also likely be required to make a down payment. Its size will vary according to several factors including the specific lender, the particular car you are purchasing, and your employment situation. A larger down payment is always better for you, though. The lender is more likely to approve a loan for a smaller amount on a deal that comes with more equity up front. Further, a larger down payment indicates your seriousness regarding the loan process.

Other Ways to Prove Your Reliability

Any evidence that you are a reliable borrower will help your cause. If you have taken out previous loans for other items (furniture, other vehicles, etc.) and paid them back in a timely manner, gather up the papers that prove it and bring them along. 

Also, bring along your recent utility bills (ones that are in your name) to show that you have consistently paid them on time. And if you happen to possess any other assets of value, bring proof of ownership with you. They might be taken in as collateral, or at least be considered more proof that you can be relied upon to pay back your loan.

Using collateral to secure a loan can result in loss of property in the event that you default on the loan.

Bring a Co-Signer

Having a co-signer is not an option for some. Nevertheless, if you can get someone to co-sign, you have a much better chance of securing your loan. 

Remember, though, that if you fail to make your payments, the burden will fall on your co-signer. So make sure that you respect the loan process and make your payments on time. If not, you risk not only losing your car but also an important personal relationship.

Keep Your Confidence

Don’t be afraid to shop around. Start with your bank if you have a checking or savings account. Also, check with your insurer. Often both are also in the business of making car loans and may be willing to give you better terms than an auto dealer will.

Don’t be afraid to negotiate. Let’s face it: You are not the perfect borrower and will likely have to pay a high interest rate. Keep in mind that lenders make loans for a living and want your business. It never hurts to ask for a lower rate or better terms.