When you have no credit history, do you automatically expect to have your auto loan rejected or do you have faith that it is possible? Most likely, you have encountered financial institutions that have denied your claim on the spot because you don’t have a credit history. They don’t know if you will be a risk for them to loan to or not. With that said, you may still need an auto loan because you want to buy a car. What do you do? We will show you step by step in the following article.
Who Doesn’t Have Credit?
What's On This Page:
- 1 Who Doesn’t Have Credit?
- 2 Getting Auto Loan with No Credit History
- 3 Building up Your Credit Score
- 4 No Credit vs. Bad Credit
Getting Auto Loan with No Credit History
Luckily, you do have options available to you. You can choose to fill out a form for a no credit auto loan. Just having no negatives on your credit score won’t always be enough to satisfy the lender. However, you can choose a no credit auto loan as a way of getting a loan tailored to your unique situation. Like with loans for poor credit scores, no credit loans will be specialized for people who don’t have a credit score, and you can generally get a more favorable rate than what you would with a poor credit auto loan.
Let’s say that you have chosen to go with one of these auto loans. Who can you visit to apply for one of these loans? Valley Auto Loans is one of the sites that you could choose to visit to get a good rate on a loan. Learning the facts of your situation can help you to buy a vehicle for the best price. When you understand your situation better, you’d be surprised at how this can help you to get a much better deal.
How to Get a Loan without a Credit History
Being in this situation is far from ideal, but everyone has to start from somewhere. You have to figure out how to build up your credit score from there. You have a couple of things that you can do to help you even when you have poor credit.
Check Your History
It may sound counterproductive when you know that you don’t have a credit score. However, in some cases, the Consumer Protection Financial Bureau recommends that you check this after every big purchase that you have made. In this way, you can figure out what gets reported to the credit bureaus, and you can figure out why they are scoring you in the way that they are. Also, you can search for errors and eliminate them.
Have a Realistic Goal
When you go to get a car loan with no credit, you should approach it with the right expectations. Having no credit doesn’t mean that you will necessarily get the best rate on an auto loan, but you can get a much better rate than someone with poor credit. At the same time, you won’t necessarily get as good of a rate as someone who has excellent credit, and understanding this upfront can keep you from rejecting a loan that would have made sense for you.
Figure out the Budget
You must form a picture of what your finances look like. You want to see where the money for getting a car will fit in the best. Besides, this helps you to plan your finances better. Looking at it realistically, you have to decide what you can spend on a vehicle. Where does the money for buying a car fit in the best? You will also want to have a look at the interest rate to determine what will make the most sense for your circumstances.
Check with the Local Dealership
Many times you will find that the local dealership offers methods to help you with financing a new vehicle. We can’t say that this makes sense in every situation, but you do have cases where going through a local dealer will make the most sense. In particular, this has become the most helpful to those with poor credit or no credit histories.
Have Someone Co-Sign for You
Let’s say that you have no credit history and you want to improve your chances of getting an auto loan. It doesn’t have to be difficult, and you can have someone co-sign for you on the auto loan. However, the co-signer should be made aware of the dangers of co-signing, and it’d be unfair for someone to do this without them understanding what they’re doing. By allowing you to get a loan, if you don’t pay the bill or you get behind on it, this will harm the co-signer. Their credit score could take a hit as a result.
Building up Your Credit Score
If time is not of the essence, you can often take the time to build up your credit score. For example, pay for things using a credit card in your name. At the same time, you pay off the credit card in full every month, and this will have a positive impact on your credit score over time. Eventually, you will get access to better loans because you have proven yourself more trustworthy to the loan company.
What Happens if You Can’t Find Help?
We’re not going to lie—getting a car loan with no credit can be difficult. However, it doesn’t have to be impossible, and with help from the right people, you can make it possible. Valley Auto Loans is a company that exists to help. If you’re struggling to find the financing for your next new vehicle, you should come and check us out. We would love the opportunity to help you. Car loans can sometimes be difficult to obtain without the right help, and that’s why we exist to help make the process much easier for customers. With just a little planning, you can put wheels to the pavement and get going.
Know Your Credit Score ahead of Time
Understanding your credit score ahead of time can help you to know if you will qualify for a loan or not. The biggest mistake that we have often seen car buyers make comes from when they step onto the lot without having a good idea about what their credit score might be. You have to check your credit beforehand to get the best results. Some of the places that you might check for getting an auto loan include:
- Credit unions
Think of the Full Price
Whenever you step onto a car lot, you should think of the full price, rather than the monthly payments. The car salesman will often try to get you to focus on the monthly payments, but this can be a deadly mistake because you could be drastically overcharged for the value of the vehicle. This trick especially comes into play with the more long-term car loans where you will have what seems like a lower monthly payment, but in fact, you could be paying much more for the vehicle than you planned. Also, the problem with a long-term loan means that you will have more trouble when it comes to trading in the car.
No Credit vs. Bad Credit
For those who have a bad credit score, they will have an account that got mismanaged. They may have even skipped it altogether. These are the types of people who are always maxing out their credit cards and never paying what they owe on them.
In some cases, these people will have faced bankruptcy or a foreclosure on their home because they couldn’t keep up with the payments on it. On the other hand, you have people who have no credit. The lending industry categorizes this as a “Thin File.” Granted, you may have done nothing wrong, but you could still be classified as similar to someone who has difficulties with managing their debt.
Most commonly, people with no credit will be younger people who have no experience with borrowing money in any way. Based on information from FICO, 53 million Americans don’t have a credit score. This can make a no credit auto loan all the more attractive because you will have a hard time borrowing money. These loans are quite common luckily, and people without credit can get access to them as needed.
One of the best ways to start building your credit up comes from opening a bank account. While it can be challenging to make improvements from that alone, many times, a bank will be more willing to work with you on getting a credit card.
You don’t have to have fears and doubts when it comes to getting an auto loan. Even if you don’t have a credit history, you have things that you can do to get an auto loan. Doing your best to improve your credit score for the future is one of the best routes that you can take.