No Credit Car Loans: Bad credit, no problem

If you are looking for a quick and easy car loan, a non-Schufa car loan could be a good option. However, you have to know what you are getting yourself into with such loans.

Credit-free car loan – the background

The simple truth is that getting auto loans or any other type of personal loan is not as easy as it used to be. Large commercial banks want nothing to do with personal loans, especially new car financing. In most cases, people who buy a new car from a dealership fund their loan through the dealership. The trader will most likely tack additional fees onto the bottom line.

What a Buyer With No Credit Auto Loans Could Experience

If your credit is not perfect, understand that you face many limitations on the type of financing you can realistically obtain. Lending is a risky endeavor. Now more than ever. The lender evaluates your repayment history. No one wants to lend money to someone who has a reputation for defaulting on loans. Those that do charge more interest and apply more restrictions. More interest means more money is paid back before you default. How your credit score affects your work ethic is another story. But it is true. Some employers won’t hire you if your credit is bad.


Collateral is a good negotiating tool. If you have enough collateral, you can buy pretty much anything you want. But if you have a bad credit history, there’s a good chance you don’t have collateral. A rock and a hard place. Just like when you were a kid. No job without experience – no experience without a job! Just as the kindhearted grocer gave you that first break, there are lenders willing to give you a break and help you restore your credit and get collateral.

Dangers of no credit car loans

Beware of wolves wearing sheepskin. There are lenders who take advantage of people with bad credit. They’re betting on the fact that you might not be quite as credit conscious. They rely on you not knowing the ins and outs of car financing. You may be asked to pay astronomical interest if you waive the credit check requirements. You could end up making payments for twenty years without ever having paid a cent of the principal.

Similarly, you have the “Title Loan”. You provide your car as collateral and commit to repaying the loan in the shortest possible time. Usually about a week. This is basically legalized loan sharking. If you borrow $200, you’ll pay back about $3-400. This can help you when buying a second car, but think about it – is a second car really that important? Why not take the bus, save and buy the second or first vehicle without all the surcharges?

Always read the fine print carefully in any type of financial transaction. If a no-credit car loan can benefit your financial situation without putting you on the ledge, then go for it.