No credit check car loans Australia

If you have bad credit history or you don't have any history, you might be considering a car loan without a credit check involved.

Responsible lending laws mean these types of loans are hard to come by. Lenders need to prove they are lending responsibly, and that includes checking a borrower's credit file.

Private lenders are likely your best option, but these loans will come with very high interest rates and costs, and could put you in financial difficulty down the road.

Let's take a closer look at no credit check car loans so you can make a more informed decision.

How do no credit check car loans work?

No credit check car loans are where certain lenders offer you a loan without checking your credit history. Instead, they base their decision to lend you money based on factors like your income, liabilities, employment status and current financial situation.

A lender that approves loans without conducting a credit check will operate under the assumption that you have bad credit. As it is more of a risk to the lender, the lender will usually impose high interest rates and require you to pay a larger deposit to qualify for the loan. You will also need to offer up the car as security, so if you fail to repay the loan they can repossess it to get their money back.

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Alternatives to no credit check car loans

If you've got a bad credit history, don't assume that the only option available to you for car financing is a no credit check car loan.

Bad credit car loan

It's entirely possible to qualify for a bad credit car loan to get the funds you need to buy your next set of wheels.

Many lenders specialise in providing financing to borrowers with bad credit. They'll still conduct a credit check before agreeing to offer you a loan, but they won't use bad credit as a reason not to lend to you. Not only can bad credit car loans be a much safer option than no credit check loans, they can also help you improve your credit rating for when you need to access financing in the future.

Car leasing and subscriptions

You might be able to lease a car instead. There are different ways you can lease a car, but a few of them are through salary sacrificing. Your employer will take the costs out of your pre-tax salary, meaning you also save money on tax. You'd need to check the options with your employer. Some leasing programs may let you work towards purchasing the car.

You might also be able to sign up to a car subscription service. You can usually lease a car for as little as 30 days.

Wait for your credit score to improve

Having a bad credit score now doesn't mean you'll have a bad score forever. If you're worried about black marks against your name, check out our guide on how long negative listings stay in your file and how you can remove them.

You can also take several simple steps to improve your credit rating and enhance your future borrowing prospects.

Features of no credit check car loans

• High interest rates. No credit check car loans typically have much higher interest rates than regular secured and unsecured loans that involve a credit check during the application process. In some cases, interest rates can be as high as 30%.
• Large deposit. You’ll usually be required to pay a hefty deposit, much more than you would for a normal car loan, in order to qualify for no credit check financing.
• Car used as collateral. Most lenders will require you to list your car as collateral for the loan. As a result, if you fall behind on your repayments, the vehicle could be repossessed.
• Direct debit payments. Most lenders will also require you to set up a direct debit arrangement to pay off the loan. If there aren’t enough funds in your account, you could start falling behind on repayments – not to mention having to deal with the additional expense of any direct debit dishonour fees charged by your bank.
• Long loan terms. Many no credit check car loans have terms in excess of five years. Combined with the notoriously high interest rates that apply to such loans, this could mean that the outstanding balance owing on your loan exceeds the resale value of your car.
• Quick turnaround time. Many lenders offer fast access to financing, with some even offering same-day turnaround.

Our expert says

"Taking out a no credit check car loan should be a last resort. With high interest rates and costs involved, you could end up paying well above the actual price of the car. If you have bad credit because of financial difficulty, this could only make things worse. Consider other options like bad credit car loans and leasing first. If you do need a no credit check car loan, see if you can get one which allows extra repayments to try and pay it off as soon as possible."

Rebecca Pike

Senior writer

How to improve my credit file

A bad credit history won’t necessarily disqualify you from car loan financing, so it’s worth considering the bad credit loan options available to you. However, if you’re afraid of what a lender will see when they access your credit file, there are a few easy things you can do to get your file into the best possible shape:

• Get your free credit score. This is free to do and will allow you to see what a lender sees when assessing your credit history. Get your free credit score from finder.com.au here.
• Take charge of debt. By making regular repayments to pay off money you have borrowed, you can not only improve your credit rating but also demonstrate to a lender your capacity to make repayments. You may also want to consider your debt consolidation options.
• Remove incorrect listings. Dispute any incorrect listings on your file and have them removed if possible.
• Negotiate with lenders. Consider negotiating with your credit provider to set up a payment arrangement to help you settle debts.
• Start saving. Work out a budget and start putting money aside from each pay packet. Being able to demonstrate a genuine ability to save money shows financial discipline and can improve your borrowing power.
• Get expert help. You can contact the free financial counselling service on 1800 007 007 to get independent financial advice about how to better manage your money.

Frequently asked questions about no credit check car loans

Written by

Alex Jeffs

Publisher

Alex Jeffs is the senior publisher for automotive content at Finder. He has tested vehicles everywhere from Tasmania to Oodnadatta. See full bio

Alex's expertise

Alex has written 52 Finder guides across topics including:

• Automotive industry
• Car finance
• Car insurance
• Personal finance