If you have bad credit, there is a chance that your auto loan application may be denied. If approved, you can expect a high interest rate. However, bad credit is not the only factor standing in the way of obtaining an auto loan. Having no credit history also makes getting a loan difficult. In fact, some lenders place no credit applicants in the same category as bad credit applicants. Individuals with no credit history have not had the opportunity to prove their credit worthiness. Before giving a loan, lenders review credit history. If you have several missed or late payments, you are considered a high risk applicant. Moreover, if you have no credit accounts, lenders are not able to judge your ability to replay loans. Obtaining a car loan with no credit history is possible; however, lenders may charge higher fees or require you to have a co-signer. Here are a few tips to help you get approved. No Credit History? Have a Down Payment If purchasing a new or used car without credit history, it may help to have a down payment. Down payment amounts vary. However, higher amounts will work in your favor. Typical down payments are 5% - 10%. To obtain a very low interest rate, which will also lower monthly payments, consider having a 20% down payment. Sub Prime Lenders for No Credit Auto Loan While traditional auto lenders may be reluctant to give money to individuals with no credit history, sub prime lenders are willing to help you build credit. These lenders include pay here, buy here dealerships. Searching for a sub prime lender online is beneficial because a simple application will provide multiple offers. You can compare rates and terms, and choose the lender with the best offer. Checking Account Improves Odds of Getting Auto Loan Having a checking account or utility bills in your name may help you obtain an auto loan with no credit. This shows financial responsibility, and may justify a decent rate. If you do not have a checking account, open one immediately. Moreover, contact your local telephone company or other utility company and add your name to the account. |
