Are you frustrated of the fact that your auto loan application is constantly rejected? You filled out forms on several websites but no good came out of it. The only reason that lenders give you is insufficient credit history.
Well, credit score is an important factor for financing a car. To establish a good credit history, you need to make regular monthly payments. To make payments, you first need to get loan. And a no credit history disallows you to get easy loans. This is a very frustrating cycle that continues.
But, you now have the option of breaking this horrendous cycle. You now have the opportunity of building your credit score without wasting money on outrageously high interest rates. You may think this is too good to be true. But, there are several lenders who offer auto loans to people with no credit.
Why Do The Lenders Offer No Credit Car Loans?
Lenders know that lack of credit history doesn’t mean you are financially incapable of making regular payments. It is definitely possible that you don’t have a credit history because you never needed to avail credit until now. Lenders also know that several people with no credit ratings are young college students.
They understand the importance of building a credit score and hence, offer zero credit auto loans.
Nothing Will Work Unless You Do – Maya Angelou
Lenders are ready to offer you car loans but you will also have to prove your financial capability. As your credit score is weak, you need to improve on other aspects.
What Factors Are Considered By Lenders While Approving Your Loan Application?
Your credit is one of the many factors considered. Others include:-
3. Proof of residence
4. Down payment
So if you are employed for over a year and have a stable income, you can get zero credit auto loans. Generally, getting a co-signer becomes difficult. So, lenders offer no credit no co-signer car loans. But, like I said make other aspects strong to get more benefits.
How to Check Your Credit History?
Before applying for zero credit car loans, it is important to know whether you actually have inadequate credit history.
According to Federal Law, you are allowed to get one free credit report per year. Go to freecreditreport.com in order to get it. There is a possibility that a certain gym membership or departmental store credit card was just enough to generate a credit rating.
You must know that if your Experian report says 9002 it means insufficient reporting to establish a credit score.
After you are sure of no credit rating, only then apply for zero credit auto loans. Otherwise, you can for the usual ones.
How to Select an Auto Lender?
Choosing the right lender is an essential step in building an excellent credit score. This is because the lender is the only person who is going to inform the credit bureau about your loan.
As every lender has different requirements and criteria for approving loans, it is essential that you apply on several websites. Once you fill the form, the company sends your application to its network of lenders and dealers who bid for it. After that, the best offer is selected for you.
When you apply on many websites, it is obvious that you will have the decision power in your own hands. In order to do so, don’t just concentrate on comparing monthly payments. According to the law, every lender is required to mention APR (Annual Percentage Ratio) in the loan contract. It will help you to know the exact cost of loan per year. Also, evaluate the lending terms and conditions. If the lender has a pre-penalty clause, you must stay away from him.
What Should I Do If I Get High Interest No Credit Auto Loan?
It is unlikely that you get high interest loan. But, even if you avail an unaffordable financing option, you can always go for refinance. After making few payments, there will be an increase in your credit score. Check it beforehand and then apply for refinance.
Do remember, “With smartness and patience, everything is possible”. So go ahead, avail an auto loan for no credit history and enjoy the comfort of your car.
Best of Luck!