Can You Get a No Deposit Loan With Bad Credit?

By Angela Monroe - November 16, 2018

If you have bad credit and are looking for a loan, things can be difficult. If you have no deposit to offer, it can sometimes feel like getting bad credit loans might be impossible. Don’t worry – it can sometimes be possible to get bad credit loans with no deposit, but it may take a while and you’ll need to be both patient and organised.

Understanding what lenders are looking for, as well as asking for help from a bad credit specialist, will help to make the entire process less stressful for you.

We can help understand your options and look for the best bad credit loans for you.

What is a no deposit loan?

A no deposit loan is just as it sounds. It is a loan that is granted to you without you offering any deposit or down payment.

With a no deposit loan, you’ll need to show the lender that you’ll be able to make the regular repayments required with the loan – this may be through showing evidence of a regular income with your job, or by having a guarantor on the loan who will take responsibility for repayments if you default.

No deposit loans have become more popular in recent years – especially as young people try to purchase homes or cars without having any savings behind them.

What are the risks of a no deposit loan?

No deposit loans pose a higher risk to the lender as they have no security or collateral against the loan. This means a no deposit loan will often have a high interest rate and additional fees.

This could mean that a no deposit loan will see you paying back a much higher amount in the long-term than with other types of loans. If you have bad credit or are in financial difficulty, you need to be absolutely sure that you’ll be able to pay back your no deposit loan or you may risk further damaging your credit score.

Is it possible to get bad credit loans with no deposit?

A lot of lenders will simply reject you if you apply for a no deposit loan with bad credit. Big banks and larger lenders have set criteria for approving bad credit loans, and you won’t match their criteria. It’s important that you don’t make numerous applications to these lenders as multiple rejections will show up on your credit history and raise alarm bells when other lenders see this.

It may be possible to get bad credit loans with no deposit from a lender who specialises in working with people who have bad credit. It will depend on a number of factors – including the amount you’re applying to borrow, as well as the reasons for your bad credit. You could also try reducing the amount of the loan that you are applying for.

It’s certainly not impossible to get bad credit loans with no deposit, but it’s definitely much harder than it would be if you had a better credit rating or were able to offer some kind of down payment.

Why is it harder to get bad credit loans with no deposit?

Generally, lenders will look for some kind of security when approving you for a loan. If you have a bad credit rating, they may see you as a more attractive lending option if you are able to offer a large deposit. Equally, if you have no deposit to offer but a clear credit history and a good record of making repayments, they might also consider you for a loan.

Applying for a no deposit loan with bad credit is often not successful as lenders have no certainty that you’ll be able to pay the money back to them. They will be taking a big risk in lending you the money and they have no guarantee that you won’t default on the loan.

Are there other options if you can’t afford a deposit?

There are a few other options you can consider if you can’t afford a deposit and you have bad credit.

You could ask for help from a friend or family member – either to help you financially with lending or gifting you the money for your deposit, or by taking on the role of guarantor for the loan. Think carefully before asking anyone to guarantee your loan as you’ll need to be aware that if you default on the loan, they’ll be responsible for paying it back.

It might be worth thinking about whether you can delay your loan application until your credit rating has improved or until you can save money for your deposit. Either of these will help in getting your loan approved.

Reducing the amount of the loan that you are asking for could be an option – although if you need to borrow a set amount, it’s obviously harder to do.

Ask for help from Loans for People With Bad Credit

We have years of experience working with people who have bad credit and want to help you to get the loan that you want.

We help people in a wide variety of situations choose the best option. Find out how we can help you with bad credit loans.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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