Occasionally, having no credit history can be as bad as having bad credit history. Before granting credit, lenders need to assess the creditworthiness of the applicant. If you have no previous creditors, a potential lender may consider a high risk and either deny a credit application or offer a high interest rate. This applies to credit cards and auto loans. Fortunately, there are many options available to those hoping to get a vehicle loan without credit history.
Bad credit and no credit auto loan
car loans are different from other types of credit. If you have bad credit or no credit history, obtain a credit card or personal loan is a challenge. For the most part, these types of loans are not guaranteed. Therefore, the creditor suffers a loss if you are unable to repay the money.
Moreover, car loans are secured. So some lenders specialize in bad credit or no credit car loans. In fact, car loans are ideal for credit or rebuilding credit. Unfortunately, if you have never financed a car, some lenders may charge higher rates. Here are some tips to help you get a low rate auto loan.
Establish credit before applying Auto Loan
The easiest way to get a low rate on an auto loan is the lending institution before applying. In some cases, lenders prefer applicants who have previously funded a vehicle. If you paid a previous car loan, or maintain regular payments, lenders consider this a good sign. Therefore, you may qualify for a low rate.
If you have excellent credit, you may qualify for super price on the page down. Establishing a good credit history is easy. Within six months of opening a new account and make regular payments on time, your credit score will rise.
Use a co-signer When Auto Loan Application
An additional approach is to obtain a vehicle loan with a cosigner. If you are married, your spouse can act as a co-debtor. Moreover, young adults trying to get an auto loan may have a parent co-sign for the loan. To qualify for a low rate, the co-signer must have good credit.