Learn more about no credit check car loans
No credit check car loans are almost impossible to find in Australia these days - but if you can't get a no credit check car loan, there are alternatives.
Can I get approved for a car loan with no credit check?
Some lenders in Australia offer car loans without checking your credit history. However, they may charge you higher fees and interest rates. They could also ask you to provide a large deposit to qualify for the loan. This is because you are seen as a ‘riskier’ borrower.
Getting a car loan from a lender that doesn’t consider your credit history may not be the best financial decision. Those with a history of struggling with debt or defaults may find themselves with car loan repayments at interest rates they cannot afford.
What is a credit check?
A credit check is a standard procedure undertaken by credit providers, such as banks, credit unions and other lenders, in which they analyse your credit history and score. In Australia, this is recorded with one or more agencies: Equifax, Illion and Experian. Tasmanians may be with the Tasmanian Collection Service.
Your credit report consists of:
- Your personal details
- A list of any credit or loans you have applied for
- Any defaults
- Your repayment history
- Any bankruptcies or insolvencies you may have accrued (for up to five years from their occurrence)
Credit checks let potential lenders see how responsible you are with your finances. They need to make an informed decision about how risky you are to take on as a client. This lets them gauge whether they should lend you money and what interest rate they will charge.
My car loan application was rejected - what are my options?
Has a lender rejected your loan application due to poor credit? It's perfectly understandable that you're now looking for a no credit-check car loan.
In Australia, the National Consumer Credit Protection Act requires lenders to lend money responsibly. Credit checks are required by all responsible lenders. This doesn’t mean that you won’t be able to get a car loan. There are lenders who understand that bad credit situations happen, and that sometimes it's no fault of the individual.
Often, it's due to unexpected circumstances. You may have lost your job or have unforeseen bills to pay. You may need a car to get you to your job. It's worth exploring what could be available to you if your credit rating is poor.
How can I finance a car if I have bad credit?
If you need a car loan, have bad credit, and think you can make the repayments, there are several options available.
- Guarantor car loans. Some lenders will offer guarantor car loans where they will run a credit check on your guarantor and not you. There is less risk to the lender by having someone support your loan application.
- Bad credit lenders. You can also apply for a car loan with bad credit specialist lenders. They will check your credit report and their interest rates will likely be higher than if you have a good credit rating. But they may be lower than loans from lenders who boast no credit checks.
- Payday loans. Payday lenders offer smaller loans for short loan terms, for example, $1,000 for up to a year. Poor credit may not be an issue with a payday loan. However, please keep in mind they have much higher interest rates and fees than traditional car loans.
Where can you get a no credit check car loan?
If your poor credit history limits your ability to get a car loan, you can consider borrowing from lenders who specialise in bad debt, or lending to individuals with bad credit ratings, such as the self-employed or first-time borrowers.
You could also consult a finance broker. Brokers generally don’t charge for their services, but receive a commission from lenders. They can recommend car loans from lenders with whom they have experience.
Can I get a car loan on a working visa?
Yes, you can. A typical car loan requirement is that you are a citizen or permanent resident of Australia. However, there are lenders who will approve loans for people on working visa holders.
These will be approved on a case-by-case basis, depending on your job and the length of your visa. For example, car loan terms are usually five to seven years. If you have a working visa, the lender will need to set the loan term around your time in Australia.
Please keep in mind
Always compare different loans and options. Be careful not to over-apply as this could have a negative effect on your credit score.
Think carefully too about whether you can afford the repayments on a car loan. If you don’t think you can keep up, you may want to reconsider. Use our car loan calculator to see what your repayments might be.
Can I get a car loan with bad credit?
Yes, you can get a car loan with bad credit, although you’ll probably find the process trickier and dearer than that experienced by people who have good credit histories.
You can find a number of lenders that specialise in bad credit car loans. However, make sure you compare bad credit car loans before you sign on the dotted line, because not all car loans are alike and having bad credit may mean you are more likely to be hit with higher fees and interest rates.
If you have bad credit, it’s important not to take out a car loan unless you can afford the repayments because a default could further damage your credit rating. Conversely, if you make all the repayments and repay the loan successfully, your credit rating might improve.
Can I get a no credit check car loan?
Even if you have bad credit or no credit history there are loans that are available to you through specialised lenders. Some lenders in Australia advertise car loan offers without running credit checks, however, the Australian National Consumer Credit Protection act requires lenders to loan money responsibly, so credit checks are normally required by all responsible lenders.
What is a bad credit car loan?
A bad credit car loan is a car loan for borrowers who have ‘bad credit’ or a bad credit history.
Some lenders refuse to offer bad credit car loans, because they believe there is an excessive risk that bad credit borrowers will not repay their loans. However, other lenders are willing to provide bad credit car loans.
Generally, these lenders charge higher interest rates for bad credit car loans than ‘prime’ car loans, reflecting the higher level of risk. Bad credit car loans may also have higher fees than prime car loans.
However, the big advantage of a bad credit car loan is that it allows borrowers with bad credit to access finance. Another advantage is that it could help bad credit borrowers improve their credit rating, assuming they make all their repayments on time.
Can I get a no credit check car loan?
You may be able to get a no credit check car loan in certain circumstances, although it’s important to weigh up your options before doing so.
Most lenders refuse to provide no credit check car loans, because they don’t want to give loans to borrowers without first confirming that they have a track record of repaying debts. So any lenders that do provide no credit check car loans would take measures to protect themselves against the risk of default.
That’s why no credit check car loans have higher interest rates than other car loans. Also, borrowers often have to provide security and put down a larger deposit.
Do I need good credit to get a car loan?
You don’t need good credit to get a car loan, although the worse your credit history, the harder and more expensive it’s likely to be.
Some lenders will do business only with borrowers who have good credit. However, there are other lenders that are willing to offer car loans to borrowers who don’t have good credit. The catch, though, is that they may charge higher interest rates and fees, and also require more paperwork.
If you don’t have good credit and want a car loan immediately, you can search for lenders that work with bad credit borrowers. If you are able to wait, you can work to improve your credit score and then apply for a car loan once you have good credit.
Do low interest no credit check car loans exist?
Some companies will advertise no credit check car loans, however under the Australian National Consumer Credit Protection act, credit checks are required by all responsible lenders, so such lenders are likely to have high interest rates. Depending on your income and credit history, you may qualify for a low interest StepUP loan from Good Shepherd Microfinance.
Who provides bad credit car loans?
Lenders that provide bad credit car loans tend to be smaller challenger lenders rather than the bigger banks.
Bad credit car loans are a niche product. The bigger banks tend to focus on mainstream car loan finance for borrowers with better credit histories. That’s why smaller lenders tend to be the ones that provide bad credit car loans.
Bad credit car loans can have high interest rates and fees, so it’s important to compare options before submitting an application.
Can I get a car loan with poor credit?
Poor credit doesn’t necessarily mean you won’t be able to get finance for your car purchase, though your options aren’t likely to be the same as someone with good credit.
In fact, a number of specialist lenders exist offering car finance for customers with poor credit, able to provide access to bad credit car loans.
However having a history of poor credit will likely mark you as a potential risk to lenders, so your car financing needs could see higher fees and interest rates. Alternatively, consider a secured car loan, which is a type of loan that uses the car you purchase as collateral, reducing the risk.
Other options include getting someone close to act as a guarantor for your car loan, or to talk to a broker about a personalised rate specific to your circumstances.
Where can I find lenders who offer no credit check car loans?
You might be better off finding a specialist lender who will look at your credit history and income, who will decide whether or not you are able to responsibility pay back the loan. Alternatively, you could contact a car finance broker.
Where can I find lenders who offer no credit check car loans?
One thing to bear in mind is that lenders who offer no credit check car loans are likely to charge higher interest rates and higher fees than on car loans that include a credit check. Also, lenders who no credit check car loans might expect you to pay a higher deposit. You might also be expected to provide security.
Lenders regard no credit check car loans as riskier than other car loans, which is why it’s a niche product that often features special conditions.
Are bad credit car loans legit?
Bad credit car loans are legit, although not all lenders and products are created equal.
Some car loan lenders refuse to do business with borrowers who have bad credit histories, but there are others that are willing to provide bad credit. There is a catch, though: some bad credit lenders are disreputable, while some bad credit loans have extremely high interest rates and fees.
That’s why it’s important to do your research and compare bad credit car loans before you submit an application.
What is a guarantor on a car loan?
A guarantor on a car loan is a third party, usually a relative or friend, who guarantees to meet the repayments of a loan for the purchase of a car, if the borrower/owner of the car defaults on the loan.
Guarantor car loans can be useful for people who would otherwise struggle in being accepted for credit to purchase a vehicle. These may include people with bad credit, students and young people who may have no credit history, as well as some pensioners.
Many lenders offer guarantor car loans, guarantor personal loans and guarantor home loans, because of the significantly reduced risk to the lender.
What is a credit score?
Your credit score is a number that represents how credit-worthy you are. The higher your credit score, the more credit-worthy you are and the more likely you are to receive loans from credit providers.
There is no industry standard for credit scores – different credit reporting bodies use different methodologies. For example, Equifax gives consumers scores between 0 and 1,200; Illion (through the Credit Simple service) gives scores between 0 and 1,000; and Experian gives scores between 0 and 999.
When it comes to car loans, lenders tend to offer lower interest rates to borrowers with better credit score. There are steps you can take to improve your credit score, including paying bills on time and paying off existing loans.
What is a balloon payment?
Some lenders will offer borrowers reduced monthly repayments in return for a one-off lump sum – or balloon payment – that the borrower has to pay at the end of the loan. Generally, the total repayments on a loan with a balloon structure will be higher than a loan without.
What is a car loan calculator?
A car loan calculator is an online tool that helps consumers understand how much they would have to repay under different scenarios. Consumers can create these different scenarios by entering different borrowing amounts, interest rates, loan terms and repayment schedules into the car loan calculator.
What is proof of income?
Before giving you a car loan, lenders will ask for proof of income – documentary evidence that you earn as much as you claim you earn. Lenders will typically want some combination of tax returns, pay slips and bank statements. The reason lenders want proof of income is because they want to be sure you have the means to repay the car loan.
What is CTP insurance?
CTP insurance, also known as compulsory third-party insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your CTP insurance will be used to pay any compensation due to anyone who might be injured or killed. However, CTP insurance doesn’t cover you for vehicle damage or theft.
What is trade-in value?
The trade-in value is the price you could realistically charge if you were to sell your car to a dealer while buying a replacement vehicle. Generally, a car’s trade-in value is less than its market value. That’s because the dealer has no interest in buying your car unless it can make a profit – which can only be done if the dealer has room to increase the price.
What is a refinance?
A refinance is when you swap one car loan with another. For example, you might take out a car loan with Lender X because it is the best on the market at the time – but two years later, you might switch to Lender Y because you discover that it now has the best loan. Conditions and fees often apply when you refinance.
What is an upfront fee?
An upfront fee is a one-off fee that many lenders charge when you take out a car loan.