The moment you think of buying a car, you will have to consider your credit score. If you have a bad credit score, many well-wishers will suggest you to apply for a no credit check auto loan. It is considered as the ideal way of buying a car when your credit score is weak.
Quick loan quotes and simple approval criteria are few of the biggest perks of the loan. Also, another benefit is that lenders do not undertake any kind of intensive background check before approving your loan. But, is a no credit check auto loan beneficial for you? Remember that not every ornament is made of gold and it is unwise to make a decision on the basis of appearances.
Every Coin has Two Sides
When you have a bad credit score, it may seem that lenders have shut their doors for you. If you think that there is no lender to help you out, you might consider applying for a no credit check auto loan. But, before you act on your decision, consider the following points:
Question of Legitimacy
You need to provide your social security number and bank account information to the lender for checking your credit score. By checking it, he will be able to ascertain your creditworthiness.
When you apply for a no credit check auto loan, the lender will not demand your social security number. It is because he doesn’t need to check your credit score. But, if a lender asks for your confidential information, be cautious. He may not be a legitimate lender. And, there is a high probability that he will steal your identity and use it for illegal purposes.
The Issue of Down Payment
The lender assumes a high risk by approving your loan request without a credit check. So, he asks for a high down payment amount. So, before applying for a no credit check auto loan, you have to be ready for making a down payment of a sizeable amount.
The Loan Term
A no credit check auto loan often comes with a long term. Car buyers consider it ideal without thinking of the results. They forget the fact that a long term means making more payments towards the interest amount. But, you must think of it before approaching a lender.
Consider the Math
If you are ready to pay high rate of interest on the loan, you can get approved easily. The interest rates are set high. It is because it allows the lender to earn profit even if you fail to pay off the entire loan amount.
Break the cycle
In order to increase their business, lenders search for desperate car buyers who believe that they have zero financing options. But, before you apply for a no credit check auto loan, conduct thorough research. Do not think that there is no solution to your problem. The loan may not serve your purpose of buying a car with affordable interest rates. It may prove to be a tempting option, but remember that appearances can be misleading. So, it is wise to read and understand all the paperwork before you sign the dotted line.