If you are a first-time car buyer, you might think that getting an auto loan with no credit history is impossible. It may be a challenge but there are steps you can take to make it happen. It’s all a matter of doing the right preparation and you can already start on your car purchasing journey. If you can’t wait to get behind the wheel and hit the road, take a look at following tips. You can get an auto loan even with no credit history.
Request a copy of your credit report
Even if you have no credit history, it is still crucial that you double check. You have a credit score under your name especially if you have been an authorized user on a credit card in the past. You can request a free copy of your credit report from the major credit bureaus every 12 months.
Get a co-signer
To increase your chances of getting approved for an auto loan, find a co-signer with good credit. Co-signing means that the person agrees to have their name added to your car loan. This is one of the things that most lenders require. So that you can qualify, especially if this is your first auto loan. If your co-signer has good credit, you do not only have a good chance of getting your loan approved. You may also be able to qualify for a better interest rate.
Prepare for a down payment
Your chances of getting your loan approved depend on the amount of the loan. But you can reduce the total loan amount by increasing your down payment. Put up a sizable down payment and increase the likelihood of getting your loan approved. Even with no credit score. The requirement per lender may vary. But it would be better if you start saving up ahead. Most lenders require about 10 percent of the selling price of the vehicle. But remember that the higher the down payment, the better.
Determine your budget
Your loan approval depends on the size of the loan. It’s important that you apply for a car loan that fits your budget. Determine how much you can afford with the help of online budget tools and auto loan calculators.
Try applying with different auto lenders
Applying for a car loan with different lenders helps you explore all the options. Once you get approved, compare the terms offered by each lender. You may also want to consider applying for a pre-approved auto loan. You can get information on the terms of your loan before you proceed to car dealerships.
Establish credit before you start applying for a car loan
When you consider buying a car, start establishing credit before you shop for an auto loan. There are certain steps you can take to build a credit. For example, you can secure your own credit card and make sure that you take good care of your records. Make frequent purchases using your card but make sure your bills are paid on time. Also, keep your credit utilization low as much as possible. It means that you must try to avoid getting too close to your credit limit. If you don’t want to apply for a credit card, you can also have yourself added as an authorized user on a credit card.
If you don’t have a credit history, a potential lender needs you to prove that you can afford the payment. They want to make sure that you can repay your debt. Include a copy of your bank statement, proof of billing and records of your employment.
Buying your first car with a car loan may be difficult without any credit history. But it doesn’t mean it is impossible. You can reach out to The Auto Warehouse for more information on the best auto loan deals.