No credit check loans are offered by smaller finance companies as a means of attracting customers with bad credit. However, no credit check loans can come with significant risks.
In our experience, there are two types of loan / credit companies that provide no credit check loans. They are:
A rent to own provider will sign you up to a contract where you agree to rent the car from them for a set period. At the end of the period, there can be the option to buy the car from the provider at a set buyout price. These agreements are most commonly used for appliances (Radio Rentals, Make it Mine etc). However, recently we have seen quite a few of these companies offering the same service for cars. Rent to own companies usually still do credit checks, however we have seen them advertise no credit check loans.
While a rent to own contract might be a good option, there are a few things to consider. The biggest caveat is that you don't get ownership of the car until after you buy it out. So if you're looking to upgrade during the contract you might be out of luck. Often these contracts can have large break fees. So in addition to not owning the car, you might have to pay large termination costs if you want to change cars. Lastly, most of these contracts include the costs to upkeep the vehicles (registration & servicing). While this might sound great, the provider will often charge a markeup on the servicing costs.
If you have been rejected for a bad credit car loan due to recent finance defaults, a Rent to Own contract might be the best way for you to get back into a car.
Payday loan companies provide small loans (usually under $2000) at large interest rates (sometimes equivalent to between 40-48% per annum).
In addition the large interest rates (somtimes up to 48%), payday loans can sometimes impact on your credit file in a negative way. When assessing loan applications, some car or home loan lenders will look for evidence of payday loans. Some lenders will decline applications on payday lender use alone.
Payday loans can be beneficial if you need a fast loan to pay for bills or bond expenses. However, there are plenty of other alternatives that could also be considered. You could be eligible for a personal loan at a much cheaper interest rate. Failing that, many retailers are offering by now pay day later options which can be viable, and cheaper, options than getting a payday loan.
Using a bad credit loan specialist is a great alternative to rent to own or payday loan providers. Here at Responsive, we call ourselves bad credit loan specialists because we compare multiple lenders who all have different criteria to get you the best outcome.
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