Securing a Car Loan With No Credit History
Applying for a car loan with no credit is challenging because most lenders base creditworthiness primarily on credit score. Nowadays, however, more and more lenders have decided to widen their clientele by accepting applicants without credit yet so long as they are able to meet certain criteria. This article discusses some tried-and-tested tips that will allow you get the best car loan deals even with little or non-existent credit history.
Consider Saving For A Down Payment
Not everyone can afford a down payment that is why most lenders don’t require one anymore. However, it would really bode well for you if you do place a down payment especially if your are applying for a no credit check auto loan. Why? A down payment can compensate for the fact that your lender has no credit report to refer to when assessing your creditworthiness. It helps reduce the risk taken by your lender on you since you are not asking for a full car financing anymore. It also shows that you are financially capable and committed to pay off your loan. Needless to say, the total amount of your debt is decreased upon making a down payment which would consequently lead to lower interest payments.
A cosigner has somewhat the same impact as with paying a down payment. Asking your best friend or close relative to be your cosigner would notably increase your chances of getting approved even without any credit history. Your lender will feel more assured that the loan will be repaid because another person is legally bound to pay it off in case of a default or if you, the primary borrower, decides to file for bankruptcy. Bringing a cosigner can also lead to a lower interest offer thus saving you a great deal of money.
Show a Proof of Income & Employment History
Essentially, the lender wants an assurance that the borrower can pay back a loan in full. Hence, if you show your lender that you earn at least $1,800 per month and have a stable employment history, then there’s no reason for your loan to get disapproved. A stable employment history is determined by how long you’ve been working for the same company. Lenders usually favor those that have done so for at least 6 months.
Pick a More Affordable Car
Choosing a cheaper car increases the chance of you being able to pay it off. Also, if you place a down payment on a relatively more affordable car, your lender will be very much inclined on approving your loan application right away. He might even give you a better deal with a lower interest. Apply only for loans that you can afford. Ending up with a default while you’re still establishing your credit is not a good way to start. Successfully paying a car loan will greatly increase your credit score which, in turn, makes you eligible for a prime loan in the future.
Choose a Shorter Loan Term
Choosing a Loan Term is crucial and should be given a lot of thought. Although paying off your loan in a longer duration involves lower monthly payments, they really rack up a lot in interest. Ideally, a short term loan is better and will save you more money because it allows you to pay less on interest and more on the principal amount.
Shop Around for the Right Lender
It always pays to look around for more financing options first in order to have a comparison. Traditional lenders, banks, and credit unions are usually very uptight when dealing with borrowers that have bad or no credit since they cannot ascertain if they are worth the risk or not. And if they do decide to give you a chance, it often comes with a lot of requirements and a very high interest rate.
New Car Canada is an online auto loan approval site that’s willing to take the risk on you. We specialize in bad credit and no credit car financing. To find out more about no credit check auto loans, fill-out our free online application and get started on establishing your own credit today. Application only takes 30 seconds and can be done through your mobile phone or computer. It is 100% FREE with no obligation to subscribe or buy anything. You can cancel anytime if you think that we’re not right for you. Click the Apply Now button below to get started and get approved in less than 24 hours!
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