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How Credit Works with Your Car Loan

If you have no credit history, then you might face difficulty in getting a car loan, but no credit car loan is available in such situations also. All of us know that having a bad credit history is a deterrent in getting approved for any kind of loan, including car loans. If approved, one has to pay higher interest rates. But having no credit history at all is an equally tough situation, as some car loan lenders put these kinds of applicants in the same category as a person with a bad credit history.

Tips For Getting Better Deal With No Credit Record

No credit history means you don’t have the opportunity to prove your credit worthiness. It is possible in case of mostly youngsters or people who are new to the country. This makes it difficult for the lending company to judge the risk associated with you. Thus you may get no credit car loan at higher rate of interest or you might need to provide a co-signer who possesses a good credit history.

You may still get no credit car loan at a better price if you follow certain tips:

If you are able to manage money for larger percentage of down payment, you will get lower interest rates. You may arrange for the down payment money through your savings or from friends and relatives help. A 10% down payment lowers the interest rates quite a lot and a 20% down payment lowers it substantially.

Instead of a traditional car loan lender, look for a sub prime lender. These lenders include the car loan calculator here, through their dealerships. A simple online car loan application for the sub prime lender will create multiple responses. You can compare rates and select the lender with the best offer.

A checking account in your name adds credibility to your case. In addition to this, if you have a few monthly utility bills paid on time, it shows that you are financial responsible. So open a checking account if you don’t have one and get your name added in the telephone or electricity bills.

In case you have managed to get a car loan in spite of having no credit records, and you feel it has higher interest rates, then you may refinance car loan after a year or so. During this period, you may build up a credit with the help of credit cards, utility bills etc. and get a much better rate of interest by means of refinancing your no credit car loan.



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