There are ads all over the Internet reading car finance, no credit needed. While many of these ads are posted by somewhat dubious lenders, there are real options for people that have no credit history. This group often includes college students or young adults who have not had time to build a credit rating. While you can expect to pay a bit more, and may need the assistance of your parents, getting a car loan is not impossible.
Build Your Credit Rating – The best thing that a young adult can do is to build a credit rating. Getting a low limit credit card and using it on a regular basis will help build your rating. Pay the balance in full every month, and on time. Having utilities at an apartment or home in your name will also help build a rating. The higher the rating, the better the chances of getting a loan at a decent interest rate.
Be Realistic – When shopping for cars, be realistic about what you can actually afford. Most college students or recent graduates do not have full time jobs. Review your budget thoroughly and decide how much you can afford on a monthly basis.
Down Payment – A large down payment will go a long way in getting a decent loan. If possible, shoot for a 20% deposit when looking at cars. Even a 10% down payment will help secure a loan. If necessary, it is often best to hold off buying a car until a decent down payment is saved up.
Co-Signer – Having a parent who has a good credit rating as a co-signer will pretty much guarantee getting a loan with a decent interest rate. The co-signer is legally obligated to make the payments should you fail to. Be certain everyone understands their obligations in this type of arrangement.
Family Bank – If your parents are long time customers of a bank, start your search for a loan there. They will take your application more seriously than a bank that has no idea who you are. Be prepared for them to ask your parents to co-sign the loan.
Dealerships – Often dealerships and manufacturers will offer deals on both new and used vehicles to college students. Keep an eye out for these deals, especially around graduation time each year. You may be able to snag a great deal.
No Credit History Auto Loans – There are ads all over the Internet for these types of loans. They should be used with great caution and as a last resort. If the more traditional banks and credit unions have declined your application, no credit check car loan sites may be your last option. Read the loan agreement carefully and ask questions about anything you are uncertain about. These companies will often charge a much higher interest rate than a traditional outlet.
Getting a car loan with little to no credit history can be hard, but there are options. It may take some time, and a lot of effort, but when you drive that new car off the lot it will all be worth it.