Sun, Oct 26th - 8:38PM
Be Loan-Ready with this No Credit Auto Loan Guide
People with no credit history are often envious of car buyers with good credit ratings. Even though banks and traditional lenders have a strict lending policy for buyers with no credit score, you can obtain no credit auto finance for buying a new car. Auto loans are not impossible for a person without established credit history. Remember that most loan rejections occur because the credit borrower doesnít have the right knowledge and doesnít apply at the right place. So, before you apply for a loan, letís get you ready for the loan program.
Haste is Waste
Car financing is a lengthy process, and there is no quick fix solution to it. To become successful in getting no credit auto loan approval, you must approach it like you approach a test. Just like a test needs preparation and hours of study, auto loans also require some planning. You need to learn the requirements of the lender and increase your approval chances.
Create a Car Budget - Without a proper budget for a car and car loan, you will end up choosing a high-priced car. When you buy an unaffordable car, you will increase your chances of ruining the credit score. So, list down all your income and expenses and ascertain a monthly payment amount that is comfortable for you.
Complete the Paperwork - Lenders will require the following documents:
2. Financial Documents like pay-stubs, receipts of utility bills, etc.
3. Bank Statements
4. College Acceptance Letter, if you are a College Student
5. Employment Verification Letter, even if you are part-time employee
Down Payment and Co-Signer - Lendersí risk increases when they provide auto financing to an individual without any credit history. It is because they cannot ascertain your borrowing history. So, they require down payment or co-signer. Lenders may even require you to provide both the things if you have:
1. Very low income
2. Recently joined work
3. Chosen a very expensive car
Once you are ready with all the paperwork and down payment, you have to make the following choices:
A. Used Car vs. New Car
Today, buying a new car with0ut any established credit history is possible. But, there are chances of receiving slightly higher interest rates. If you earn a stable income of more than $1800 per month (gross monthly income) and can manage higher payments, you can buy a brand new car.
But, if you want to opt for an affordable option, it is always advisable to buy a reliable used car. Once you complete your education and start your job, you can buy a new car. By then, you would have established a good credit history which will be an added advantage.
B. Dealer vs. Private Party
If you want to buy a used car, you have two options. Either you can buy it from a dealership or purchase a vehicle from your friend, colleague or neighbor. It will be considered as private party car purchase. Dealership will provide you with the benefit of warranty and reliability whereas private party purchase will ensure a lower price. Lenders offer no credit auto loans for both the types of car purchases and choose any one.
C. Online Lenders vs. Dealership Finance
When you are done thinking about the car, you have few options to consider for your loan. You can either apply with an online lender or choose dealership financing. Both the options are convenient for a no credit buyer because each provides approval with fewer restrictions.
Once you decide on the above-mentioned factors, you will be ready for no credit auto loans.
Rapid Car Loans is a leader of the auto financing market. It has helped several young car buyers in obtaining zero credit auto loans. Contact the company for obtaining quick approval on first-time car buyer program. Apply now.