Are No Credit Check Car Loans real or just a marketing tool?

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If you’re shopping around for a new car, you may have seen signs or banners outside auto dealers offering ‘No Credit Check Car Loans’ or something similar. They sound too good to be true if you’re rebuilding your credit score, so are they real or just designed to get you in the door?
 
No credit check car loans are real but they may not be your best option. Rather than actually checking your credit score using the usual methods, the lender of a no credit check car loan will just assume that you have bad credit and price your loan accordingly. So rather than perform an actual check to see what your score is, the lender assumes it’s bad.
 
It isn’t (always) a scam but it may not be the best method of financing a car.
 
No credit check car loans
A loan like this assumes the worst of you when that may not be the case. They can work out quite expensive and you may have much better options. The downside of these no check car loans is that they often require a larger down payment, incur higher interest rates and perhaps longer loan terms. Much depends on the exact product being sold.
 
You can pretty much guarantee the first two but the payment term can vary depending on your down payment, the sum of finance and your agreed monthly payment.
 
Are no credit check car loans worth it?
In our experience, this type of loan does not usually make good financial sense. The only benefit it offers is that it doesn’t do a hard inquiry on your credit file. As these hard inquiries don’t usually impact your credit score anyway, it isn’t much of a benefit.
 
The main exception to this is if you have been getting a lot on credit recently. The more hard inquiries you have in a short period of time, the more suspicious or cautious a lender might be. There is a difference between shopping around and maxing out your credit though and most lenders can tell the difference.
 
Car Nation Canada works with people with all kinds of histories and credit scores. We work with reputable lenders who offer good value car loans to people from all walks of life. In our experience, there is no benefit to using a no credit check car loan over the loans we offer. We tend to get lower interest rates and much more favourable terms for our customers and we would likely be able to do the same to you.
 
While it may be tempting to go for this easy option, you will likely end up paying for it over the long term. With higher interest rates, a large required down payment and perhaps a longer payment term, they just don’t make sense.
 
If you want an affordable car loan, come see us instead. We’ll see you right.
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