Learn more about no credit check car loans
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.
A guarantor car loan is a type of loan that features a guarantor on the agreement. The guarantor is a third-party individual, often a friend or relative, who guarantees the loan will be repaid if the borrower defaults on the car loan.
Guarantor car loans are often geared at people who might otherwise struggle being accepted for a secured car loan when purchasing a vehicle. Some of the reasons might include a lack of credit history such as with a student or young person, if there’s bad credit, or age as a factor such as with pensioners.
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.
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.
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.
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.
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.