Obtaining A Car Loan When You Have No Credit

Posted on: 27 June 2017

If you wish to purchase a vehicle, and you do not have any credit history via cards or loans, it is likely you are concerned in being able to get money needed to get your desired transportation source. There are a few steps you can take in advance of a trip to a dealership in preparation for a loan approval. Here are some tips that will make it easier to get an auto loan.

Get Documents And A Co-signer Ready

When you ask a lender for a loan, proof of your income and any expenses you handle regularly will be necessary to show to the company representative you meet with when applying. Before you apply for a loan, ask a trusted friend or relative to co-sign for you. This person will be responsible for any payments you do not make. For this reason, most people use a close relative as their co-signer as friendships would be put at risk if monetary issues arise between parties. Your co-signer will need to come with you at the time you apply for a loan.

Sign Up For A Bank Account

If you do not have a bank account, head to a local bank to enroll for a checking or savings account. Keep money in the account and start socking cash into it to use for a down payment on a vehicle. Do your best to save at least twenty percent of the vehicle's price. Your payments will be lower as a result. Showing a money lender that you had worked hard at saving this money will look favorable and make it more likely a loan will be approved.

Inquire About Rates And Terms From Different Companies

Ask your bank about their loan rates first. They will be more apt to give you a favorable answer when applying for a loan since you are their customer. They will have had the chance to see you diligently placing money into your account, helping them to trust you as a loan recipient since they have seen your dedication in your saving. It is a good idea to find out about rates and the length of car loans from a few different places if possible. You may find the amounts vary substantially. Your insurance company and the auto dealer where you wish to purchase a vehicle may also give you a loan without credit history. Make sure to read all fine print on loans to ensure your monthly payment does not increase after a set amount of time.