Having a vehicle or reliable transportation is a necessity for adults with responsibilities. However, if you don't have good credit or a credit history, acquiring a car loan can prove challenging. Auto lenders use your three-digit credit score to assess your likelihood of repaying the car loan. And even if you have the best intentions of repaying the loan, having no credit history makes a lender nervous. Still, there are ways to acquire a car loan with no credit history.
Show Steady Employment Or Income
A steady job or a steady source of income can compensate for no credit history. Being in a position to realistically afford a car payment is imperative, and auto lenders closely evaluate a borrower's financial circumstances before approving his request for a loan. Look for employment and stick with the same employer for a few months before applying for a loan. Be sure to keep copies of your paycheck stubs or tax returns to provide proof of income.
Find The Right Auto Dealer
Most cities feature at least one dealership that advertises, "buy here, pay here." These dealerships help people with no credit history and bad credit. Obtaining an auto loan is a quick and simple way to build or restore a credit history. And since the automobile secures the loan or serves as collateral, these lenders are more apt to take a chance on a person with no credit history. Unfortunately, these dealers may require a down payment and charge a higher interest rate.
Bring a Co-Signer
Since individuals with a good credit history are more likely to repay an auto loan, using someone with a good credit history to co-sign your auto loan can help you secure a loan with a reasonable interest rate. Finding a co-signer is tricky because he becomes responsible for the debt if you default. Demonstrating a measure of responsibility, such as maintaining a bank account in good standing or paying a cell phone or utility bill on time, can put family member of friend at ease so that they may willingly co-sign your vehicle loan.
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