No Credit Check Car Finance for Those With Poor Credit Scores
Getting a loan to help you pay for your next car seems like a great way to make it more manageable in the short and long term – you won’t need to dish out a large lump sum, instead of covering the cost of your car with simple monthly repayments that are easier to find the funds for on a regular basis. However, car finance loans aren’t always available to everyone, with the account holder needing to pass a credit check before they can be accepted – for people with bad credit or no credit profile at all, this can be a huge obstacle to tackle. Find out more about no credit check car finance and bad credit car finance below to see if you’re eligible for a plan that might help to make your new car more affordable.
Who Would Need No Credit Check Car Finance?
A no credit check car finance deal would be suitable for people who struggle with their credit score – this could be that there has been previous or current poor credit ratings, or that the person does not have a credit score at this point. This is a common case with young drivers who have only just started to build a credit profile. Customers who have an IVA or CCJ could also make use of a no credit check finance deal, as these can have considerable negative impacts on the credit score of the individual.
Does ChooseMyCar Offer No Credit Check Car Finance?
Unfortunately, lenders cannot strictly offer no credit check car finance to their customers – this helps both the lender and the applicant protect themselves in the situation. Whilst it’s not possible to proceed without a credit check, there are different variations of the credit check that can be done to help individuals who may have poor credit. These come in the forms of soft credit checks and hard credit checks.
Soft Credit Checks
This takes part during the initial part of the process, before entering into a contract with the lender. A soft search is less rigorous and will not appear on your credit report in the same way that a hard search would, meaning you won’t feel any long-lasting impacts on your credit score by undergoing a soft search during the car finance application process. Here at ChooseMyCar, we give our applicants the option to undergo a soft search check initially to gauge whether they may be eligible for our car finance packages, before conducting a hard search when progressing with the application. This offers both the lender and the borrower better protection throughout the lending process. This soft search system acts in place of a no credit check car finance plan, enabling those with poor credit or no credit history to apply for car finance with more confidence and clarity.
There is one point to keep in mind with soft searches, however; these searches can be conducted without your knowledge or permission, meaning you can have a soft search conducted on your at any point without knowing. There are a few instances where you can expect this to happen, so don’t be too alarmed if you notice that one of these searches has been done – it doesn’t show any detailed information, it just gives a basic overview of your credit history just as it does when you take a look at your own credit file. Here are a few examples of when a soft search may be done on your credit file:
Your employer is likely to conduct a soft credit check on your account when you’re in the process of being hired – by conducting this search, the company gets a greater insight into the person that they are about to hire, allowing them to gauge how responsible and reliable the person may be based on their financial history. This is no reason to worry, as you cannot be penalised due to your credit history as equal employment regulations are in place to ensure everyone has an even chance at opportunities regardless of their background.
An insurance company may conduct a soft-search on your credit history to see if you may be pre-approved for one of their credit cards – may credit card providers use this as a way to entice people into applying for their cards, with the knowledge that they have already been approved on a preliminary basis. This is particularly helpful for people who have bad credit and are looking to apply for a credit card, as it allows them to apply with more confidence and peace of mind.
Car Finance Providers
As previously mentioned, car providers may also carry out a soft search credit check during your car finance application, particularly brokers such as ourselves here at ChooseMyCar who specialise in bad credit car finance. By running your profile through a soft search first, we’ll be able to see if you are given pre-approval before running you through a hard check – by doing it this way, you’ll only be subjected to a formal credit check (the kind that will appear on your credit file in future searches) if you’re already passed the first stage.
Hard Credit Checks
After a soft search has been conducted, you’ll have a better understanding of how a further hard check may turn out – the soft check does not always return the same response as a hard check, however, so please bear this in mind as you proceed with your application. To carry out a hard search credit check, most lenders will need to see a driving licence; this can be a full licence or provisional. In addition to your licence, it’s also probable you might be asked to provide any of the following information too:
- Your passport – this is for full proof of ID
- Proof of address such as a utility bill or council tax letter – this should be dated within the last 3 months
- A payslip – this provides proof of income to ensure that you can repay your loan.
With hard credit searches obviously being of incredibly high importance and having a larger, longer-lasting impact than soft searches, you’ll want to know who might be subjecting you to one and when it might happen. Thankfully, these searches cannot happen without your permission, so you’ll always be aware that it is about to take place. Here are a few example of when you can expect to be asked to consent to a hard credit check:
Credit Card Applications
As well as the initial soft check we mentioned earlier, credit card companies will also have to complete a more thorough credit check to ensure that you meet the criteria required to be offered credit. You’ll find that almost any service with a financial aspect such as loaning, lending, or payment plans will require you to pass a credit check – this is to ensure that you can maintain regular payments.
As with any other application process that involves a sum of money being borrowed, or any other type of borrowing, a credit check is required when applying for car finance. The provider will be offering you a considerable sum in these applications, so it’s natural that they will need to do their due diligence before offering this large amount of money to the applicant.
One place where these searches may not initially seem relevant is with your landlord, but after consideration it does make sense that your landlord will want to ensure that you’re able to keep up regular payments on the property. In these scenarios, it’s likely that just a hard search will be completed, as the value of property is so high, meaning that the landlord has to be sure that the applicant is capable of stick in to their payment plan.
As you can see, it’s never really feasible to offer no credit check car insurance – instead, you’ll want to look for providers who offer an initial soft search system, as this will allow you to check whether you might be eligible for the finance before you are subject to a hard credit check which could impact your credit score and remain on your credit file.
Will I Need A Credit Check For Car Finance?
As with any form of lending, a credit check will be required at some point of the process – the point that this check comes may differ with different lenders, but all legitimate loans will be covered by a credit check. The credit check is in place to not only protect the lender but the borrower too; by completing a check, both parties will be able to see whether it’s a sensible idea to lend them money and whether the borrower can afford to make regular repayments without leaving themselves in a precarious situation.
Lenders offering no credit check car finance may sound too good to be true because they are. Without the safety of a credit check and contract in place, you’re likely to be paying over the odds or dealing with a lender that is not certified or trustworthy, so it’s best to avoid these lenders at all costs, instead of operating with a trusted, certified lender such as ChooseMyCar.
Our initial soft search is a fantastic feature for people who have bad credit or no credit to utilise as it enables you to get a basic overview of your credit status without having to consent to a hard credit check, which will leave a mark on your credit file. You want to avoid having too many hard searches too frequently, as this can have a negative impact on your credit score.
Start your application for our bad credit car finance deals here today to see if you are eligible for our deals – you’ll get instant approval from our system, then you’ll be able to browse our cars and pick out the perfect vehicle for you! You’ll be able to choose from snappy city cars, comfortable family cars, or something with a little more luxury too – we’ve got a huge selection to choose from, with styles, colours, and sizes to suit everyone’s needs.
How Can I Check My Credit Score?
Checking your credit score has never been easier than it is right now thanks to the various tools and vendors available online. No matter which service you use, you’ll likely be having your report conducted by one of three ‘credit reference agencies’ – these are:
Each of these credit agencies operates in a slightly different way and conducts their research to form a credit score, but you’ll find the results quite consistent between the three so you shouldn’t worry about choosing a CRA too much. When looking online for credit rating services, you’re likely to come across many platforms that are used to display your score in a way that’s easier to read; when you’re just given a number for your result it can be tough to see the issues causing your score to be lower than expected, which makes the entire process even more complicated. When using a good credit rating service, you’ll find the issues on your account highlighted, detailing where the issues are, what makes it an issue, and how you might be able to start improving that score.
Whilst there are services that can be paid for to allow for greater insight into your credit score, all CRAs have a statutory obligation to provide you with a copy of your credit report for free, so don’t feel obliged to pay for a service to gain access to your credit score.
What Is Involved In A Car Credit Check?
If you’ve found that your credit score is lower than you’re expecting, you’ll want to know why – knowing the reasons behind your poor rating helps you to identify problems and start to fix them. One way to find the issues relating to your credit account is to look at the factors that are considered in a credit rating, then thinking about which aspects you may have fallen short on. The factors considered in a credit check are as follows:
- You credit accounts: This covers every account that you have open regardless of the bank/building society it is with, and the vendor of the card. This will include credit cards and debit cards, but will also consider other credit arrangements that are associated with your credit file such as loan agreements, utility debts, and so on. During your credit rating, the CRA will look for information relating to payments, whether they were made, whether they were made on time, and whether they have defaulted. If you miss a payment, make a late payment, or are handed a default, this will remain on your account for future searches to see for at least 6 years, so be careful with your payments if you want to maintain a healthy score. Your credit limit will also be taken into account during this check, with a higher credit limit and lower usage indicating that you might be a more reliable borrower.
- Financial links: Another aspect that is considered is your financial links to other people. The most common form of association is joint credit, commonly used for things such as mortgages. In these agreements, your credit file is linked with another person’s account, which could positively or negatively impact your score depending on how well the individual manages their credit.
- Public record information: This relates to legal matters such as County Court Judgements (CCJ, otherwise knows as Decrees in Scotland), house repossessions, bankruptcies, and individual voluntary arrangements. If any of the aforementioned is attached to your credit account, you are likely to see your score take a hit, with each instance remaining on your account for at least 6 years.
- Current account: As you would expect, your credit check will take a look at who your current account is held with, as well as any overdraft that is outstanding on this account too. By looking at your current account and overdraft, the CRA will be able to judge how reliable you are when it comes to making repayments.
- Electoral register: It is standard procedure to check whether the applicant is on the electoral roll at their current address – this can be used as further proof of identification.
- Name and DOB: As expected, you’ll have your name and date of birth taken during a credit check, this again is for validation purposes when it comes to identification.
- Fraud: Any known fraud related to your account will be taken into consideration – this includes instances where you have committed fraud, as well as instances in which your identity has been stolen and fraud has been committed. This will be kept on your credit profile in the CIFAS section.
Despite all of this, there are also certain factors which will not impact your credit score which you may expect to – your salary is not taken into account during a credit check, nor is religion or any criminal record you may hold. In many circumstances, these would be part of checks and may negatively impact your likelihood for approval, but during a credit report, you are not allowed to be judged on those factors.
How Can I Apply For Car Finance?
Although no credit check car finance is not a viable option, there are still ways in which you may be able to receive credit for car finance through a lender – lenders who specialise in bad credit car finance will often use finance structures that are tailored to individuals with bad or no credit scores, allowing everyone the chance to drive the vehicle of their choice. The first step in applying for bad credit car finance will be understanding how much you can afford – by being reasonable and realistic, you’ll give yourself the best chance of being able to keep up payments and building your credit score. You can utilise the ChooseMyCar finance calculator to learn more about how your finance deal will work, as well as being given a better idea of what you will be able to afford.
Once you’ve decided on an amount that’s affordable and manageable within your budget using our finance calculator, it’s time to start your application! You can do this right here on our website – click here to start your application now! Once you’ve started your application, you’ll be given a quick decision through our bad credit car finance approval system, which will inform you whether you’ve been successful.
If your application is successful it means that your finance eligibility is good, so you can now browse our fantastic selection of used cars to find the set of wheels that best suits you. We have a huge range of cars to suit everyone’s needs, whether it’s a compact city car or a family car that’s built for the school run; every person’s circumstances are different, and that’s reflected in the selection of vehicles that we offer.
After you’ve found that perfect car, you’ll be given the opportunity to agree to your finance repayments, here you’ll be given a detailed breakdown of what you’ll be paying, how long you’ll be paying for, and the guidelines surrounding this. Once that’s signed, it’s just a case of allowing our friendly team to guide you through all of the paperwork so we can make the agreement official!
The final, and most exciting, step is to pick up the keys for your new vehicle and drive off the forecourt in style! Once your credit agreement and the payment plan is finalised, you’ll be able to pick up your car and head off home using your new set of wheels.
Frequently Asked Questions
Some lenders offer No Credit Check Car Finance solutions. These lenders tend to charge higher fees that can significantly increase the cost of your Car Loan over time. Credit Unions can often offer better rates with more flexibility. Guarantor Loans, where your repayments are guaranteed by a third party, are also an option if you feel your score is too low to arrange a Car Loan by yourself.
A default can impact your ability to gain approval for car finance, however it does not make it impossible – many finance providers have tailored systems to enable people with bad credit or no credit history to be able to get on the road. These finance packages tend to have slightly higher interest rates and could also require a larger deposit, however this will allow you to get yourself a car in a way that is still affordable.
One way to try to reduce the impact of the default on your credit file when applying for car finance is to add a ‘notice of correction’. This is a short statement that outlines the reasoning behind the default, which lenders will be able to view whilst assessing your application for credit. In the event of a default, you should always try to contact the lender and make an effort to pay the debt – no matter how small your payment is, an attempt to reduce the debt owed will have creditors viewing you more favourably.
Yes. Lenders are not legally obliged to check your Credit Score before offering you Car Finance, though it’s a widely accepted practice to do so. Specialist lenders can offer Car Finance without a Credit Check but may charge higher fees, which will increase the cost of the Finance over time. Credit Agencies may also agree to offer finance without undertaking a Credit Check.
For people with bad credit, the prospect of obtaining car finance without having to go through a credit check would be an ideal situation, however it isn’t something that you’ll be able to find – there would be far too much risk involved if lenders did not perform credit checks on applicants. This shouldn’t worry you too much, as there are still lots of options available when it comes to bad credit car finance!
Here at choose my car, we provide an initial soft search credit check before we conduct a formal search – this allows us to see whether you may be approved using a method that does not impact your credit file before conducting a hard search which will.
Unfortunately, there is no exact number to aim for when it comes to car finance, with much of the approval process taking many other factors surrounding the application into consideration. For example, there are many instances where a person with a great credit score may be refused credit for a car and vice versa – this is because the circumstances dictate that one person is more likely to be able to make their payments.
For example, if you were looking for an Aston Martin Vantage 2020, your monthly payments would most likely cost at least £3000 per month. Even if you have an immaculate credit score, it is unlikely that you would be granted credit for this vehicle unless you have a very substantial monthly income.
On the other hand, an applicant looking for a Ford Fiesta with monthly payments of around £100 will be far more likely to be granted credit, even if their credit score has a little bit of work to be done. This is is because the car is more affordable and does not require extensive disposal income to be made feasible.
This is a great example of how the application process is very circumstantial and that poor credit is not always the roadblock that you think it might be – it’s all about being sensible and realistic with your expectations.
If you are deemed too high a risk to be granted credit, you will be refused during your application process. This can be very disappointing news to hear, however it is not the end of the road and you may be able to take additional steps to ensure that you’ve got a shiny new car in the near future.
First of all, you’ll want to understand why you’ve been refused – you may not be able to change this right away, but it does give you an idea of what changes you need to make in the future. In some cases, a rejected application may not have anything to do with your credit score or the vehicle you’re looking at, inputting errors on the form is just one of many small mistakes that could lead to rejection. In these instances, it’s worth checking through your application again to see if you can spot any mistyped words or inaccurate data.
Applying for car finance can have an impact on your credit score, but it’s your actions that will determine whether this is a positive or negative impact. Initially, your application for credit may have a negative impact on your credit score – this is because applying for credit is seen as a risk and therefore more risk is now associated with your credit file. However, in the long term your car finance payments could actually help you to build up a much stronger credit score – regular, ontime payments are a huge positive for your credit score, so if you manage to stick to your payment plan you may be able to show yourself to be a very reliable and responsible borrower.
A debt management plan is put in place when you have trouble paying your existing debts, but how does that impact your ability to apply for car finance? You can find all of our information relating to car finance whilst under a DMP on our DMP car finance page!
A County Court Judgement or CCJ is an order put in place by the court when money is owed without signs of repayment. If you are handed a CCJ, it can have a negative impact on your credit score and your ability to apply for finance in some circumstances, however you may still be able to get car finance using a bad credit car finance provider such as ChooseMyCar who offer deals tailored to people in bad credit situations.