There’s no doubt about it, credit is hard to get these days. Even after the bank bailout, with the huge infusion of money to their coffers, bankers are stricter about giving out loans. You need a car. You have no credit history whatsoever. So, how about auto loans for people with no credit? Is this an impossible dream? Not at all. Surprisingly, if you have no credit history and are looking for an auto loan, chances are good you can obtain that loan. Here’s how to tackle the task and get that car.
The way the banks look at it is that no credit is better than bad credit. They want your business. The interest on the loan is cash on the hoof for them. So what do you need to qualify?
The first thing you need to know is that bankers view a loan with collateral in a far more favorable light than a loan without collateral. For example, if you’re going for a credit card line of credit, if you default, the bank has no way to recoup the loss? They can’t repossess your groceries or that fancy pair of shoes. With an auto loan, the picture, from a banker’s point of view, is entirely different. They will only loan a percentage of the car’s value, that dollar amount that they can recoup, through the sale of the car, should you default. It’s really a win-win for them. When reviewing applications for auto loans for people with no credit, the lender has two important components in their favor: you need the car, they collect interest, and they have collateral should you fail to make the payments.
If you have a job which you’ve had for a year or more, pay your rent and utilities on time and are breathing, you’re likely to get the loan. Remember, auto loans for people with no credit means exactly that. You have no credit history. This can be a good thing. Get a copy of your credit report. If there’s nothing listed, this means, from the lender’s perspective, that you’ve satisfied the ordinary debts everyone incurs, such as rent and utilities. If you’ve defaulted on these debts, it will show up on your credit report. If not, the lender will rub his or her hands together in the happy anticipation of the interest the bank will realize.
You can further ‘feather your nest’, so to speak, with a reference from your landlord or utility companies which you freely pen in on your loan application. Sure, they’ll check your credit report anyway, but this gesture helps make a good impression. You’ve got nothing to hide.
If you don’t already have a savings account, start one, with regular, albeit small, deposits made via electronic transfers from your checking account. This bespeaks a financially responsible person. Points for you. If your paycheck is not now made via direct deposit, initiate the paperwork to make this happen. The lender then knows that your income goes straight to your account with every payday, making it easy to set up an automatic debit for the loan payment. When going through the approval process for auto loans for people with no credit, all of these factors can give you an edge.
Finally, consider that people who have gone through bankruptcy are able to obtain an auto loan. The collateral component is paramount. Don’t be shy. Auto loans for people with no credit are a dream come true. Apply and drive away tomorrow!