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In this day and age, getting approval for a car loan is possible within mere hours. Most banks and financial institutions take just about 24 hours to 48 hours to verify and approve the car loan applications they get. Loans can be obtained for both new cars as well as used cars. As a part of the application process, lending institutions may require a list of documents from the applicant in order to perform various checks. In addition to establishing the identity, these documents also help companies understand the financial credibility of the applicant.
Most financial institutions conduct a thorough credit check on the applicant before offering car loans. This check is performed mainly to ensure that the borrower has the financial capability to repay the loan in time. Most banks and financial institutions reject applicants with bad credit history. If you are someone who has poor credit score, it need not necessarily mean the end of the world. There are certain options you can explore to obtain car loan without credit check.
In the credit market, financial institutions use CIBIL score to understand the credit history of an individual. CIBIL maintains a database with information about a person’s credit card usage and loans taken or applied. Based on the repayment history of the individual, a particular score is assigned to individuals. This score determines the creditworthiness and financial stability of individuals. In order to provide car loans, most financial institutions expect applicants to maintain a CIBIL score of 750 and above. Most of the top lenders in the country reject applicants who do not have the minimum required CIBIL score. However, there are other ways to get a car loan even with poor CIBIL score.
It goes without saying that no credit check loans are preferred by people with poor credit score. Most financial institutions operating in the country consider them as credit risk, and they do not entertain loan applications from these individuals. All conventional methods of availing car loan requires credit check no matter who the lender is. People who are in urgent requirement of car loans can try some unconventional methods to find lenders who are willing to take this risk. It is worth noting that no credit check loans typically come with higher interest rates and strict repayment terms.
One thing you must keep in mind while getting a no credit check loans is that you must know who you are dealing with. There are cases where people got cheated or charged unfair interest rates when they avail these types of loans. Before you opt for this loan, make sure that the interest rates are fair (for a loan without credit check) and the repayment terms are manageable within your budget.
Getting a car loan without credit check may not be entirely out of scope. Here is what you can do to get no credit check car loans available in the market.
Internet search - The internet can help you locate lenders that are not mainstream financial institutions. There are many small time financial institutions that offer loans without conducting any credit check. Make sure that you find a lender with interest rates acceptable to you.
Cooperative banks - There are certain cooperative banks that offer low interest car loans with minimal (or nil) credit checks on the applicant. However, it may come with certain downsides like high interest rates and low loan limit.
Private lenders - There are plenty of private lenders who operate in the market. These lenders typically provide secured car loans against the vehicle. The interest rates here will be much higher than that of banks. However, you can avail loans even with poor credit score.
Most of the no credit check loans obtained through unconventional methods are secured loans offered against the property (car). By pledging the car against the loan amount, you can get attractive interest rates and repayment terms from the lender even if your credit score is low. If you fail to repay the loan instalments repeatedly, the lender will possess the car and reclaim the loan amount by selling it in the market.
Most private lenders in the market operate on this basis. For people with poor credit score, this type of secured no credit check loans can be beneficial to a certain extent since they can enjoy attractive terms even without maintaining a proper credit score. Before you opt for this type of loan, make sure that the terms are acceptable. Also, check the reputation of the lender in terms of flexibility offered in repayment terms.
One of the advantages of availing car loan without credit check is the ease in obtaining loan with a poor credit score. Most of the mainstream lenders in the market outrightly reject applications from individuals with poor credit score. The number of credit enquires made is one of the factors considered when determining the credit score. Repeated rejections by mainstream lenders will worsen the score even further. In this situation, it is better to opt for a lender that does not perform any credit check on the individual.
In most cases, loans of these types have a quick approval process. Since there is no credit verification process, loan approval can be done within a few hours. When it comes to car loans, the lender is protected from defaults through the value of the vehicle pledged against the loan. Hence, there is no need for any cosigners when you want to avail this loan. People opt for this type of loans only when there is no other option available. Under these dire circumstances, this loan can be really helpful.
One of the notable disadvantages of no credit check car loan is the high interest rate associated with it. No credit check requirement comes with its own price, and borrowers must be prepared to pay this price. For lenders, offering these loans come with a risk. To offset this risk, they charge high interest rates from borrowers. Another significant disadvantage with this loan is the possibility of unfavourable terms. Typically, lenders dictate the terms for these kinds of loans. Without any other choice, borrowers opt for these loans even with unfavourable terms.
Getting a car loan without credit check is a tricky process that may not be commonly available in the credit market. However, there are certain lenders who prefer offering these loans to take advantage of the high interest they can charge. While this is beneficial for people with bad credit, it could also adversely impact them. In certain cases, the terms of these loans may be disastrous for people who are already under financial troubles. Make sure that the repayment terms and interest rates are according to your preference before you think about signing up for this loan.