How to Obtain No Credit Car Loans
Though good credit is valuable, is there a such thing as no credit car loans? Yes! Find out how to easily obtain an auto loan without credit experience.
Did you know that approximately 45 million Americans have no credit score at all?
If you’re part of this group, you might think that it’s impossible for you to get approved for a car loan. That’s not exactly true, though.
There are lots of loans out there designed for people with low credit scores, as well as those with no credit score.
Read on to learn more about no credit car loans and how you can increase your chances of getting approved for one.
No Credit Car Loan Minimum Qualifications
If you have a bad credit score or no credit score, you can still qualify for a car loan. You just have to make sure you meet some other basic qualifications, including the following:
- Have a gross monthly income of at least $1,500
- Provide proof that you are a legal U.S. or Canadian resident
- Provide proof that you are at least 18 years of age or older
If you have filed for bankruptcy in the past, you may also need to complete some additional paperwork to show that you authorized to purchase a car.
Many car dealerships also work with specific lenders to provide financing to people who might not otherwise qualify for an auto loan.
When you begin looking to purchase a car, consider asking the lender which dealerships they work with or recommend purchasing a car from.
Increase Your Chances of Approval
If you meet these minimum qualifications, there’s a good chance your auto loan application will be approved.
There are some other steps you can take to increase your chances even more, though, including the following:
Check Your Credit History
You may think you have no credit history, but it’s a good idea to double check before you apply for an auto loan. You might find out that you do, actually have a credit score.
Checking your credit report also allows you to notice and correct any errors that might affect your credit in the future.
Set a Budget
Figure out how much money you are able to spend on a car before you apply for a loan, too.
Think, specifically, about what you can afford to spend each month on the car and insurance. Don’t forget about maintenance and gas, too.
Doing these calculations and putting together a budget first will help you figure out how much money you should ask for when you fill out your loan application.
Consider a Higher Down Payment
You’ll have an easier time getting approved for a car loan — even if you don’t have a credit score — if you’re able to put down a larger down payment.
This makes you a more credible lending candidate. It will also help to lower your monthly car payments, so it’s a good strategy for every car buyer to use.
Consider a Co-Signer
You can also increase your chances of getting approved if you find someone who can co-sign your loan.
A co-signer is someone with a high credit score who agrees to take over your loan payments if you default.
Having someone co-sign your loan can help to bring down the monthly payments and give you better terms and interest rates.
A co-signer is a great option to consider.
Just keep in mind that it’s a big responsibility, and it can be difficult to find someone who’s willing to co-sign your loan. You may have to ask a few different people before you get a “yes”.
Gather Appropriate Documents
Make sure you have all the necessary documentation ready to go when you apply for your auto loan, too.
The following are some documents that will help you make a good case for yourself and prove that you can pay back the loan:
- A copy of your bank statement to verify your monthly income
- Documentation of recurring bills like your cell phone or utility bills — this helps to show that you pay your other bills on time each month
- Pay stubs or other documents that provide proof of employment
If you can provide these documents when you’re applying for a loan, you’ll have a much better chance of getting approved.
Work with an Online Lender
You can also increase your chances of having your auto loan application approved if you work with an online lender.
Online lenders are often more flexible than traditional lenders and are willing to work with a wider range of customers.
Keep in mind that online lenders also tend to have better loan terms and rates, so it’s worth working with them even if you do have a good credit score.
Tips for Building Your Credit Score
If you want to build up your credit score before you apply for a car loan, there are a few different steps you can take, including the following:
- Make all of your loan payments on time
- Pay your utility bills and other bills on time, too
- Open a credit card account and pay your balance in full each month (it’s a common mistake to assume that you should carry a balance over from month to month)
- Don’t apply for too many credit cards or loans at once (this has a negative effect on your credit score)
Once you have your auto loan application approved, you can also use that loan to build your credit score.
If you make the monthly payments on time, you’ll start building credit and will have an easier time getting approved for loans in the future. You might also be able to refinance your loan later to get better terms.
Apply for No Credit Car Loans Today
If you don’t have a credit score but need a car, you still have options (that don’t involve taking public transportation for the rest of your life).
There are lots of no credit car loans that you can apply for.
If you meet the minimum qualifications listed above and keep these other tips in mind, you’ll have a much easier time having your application approved.
Are you ready to apply for an auto loan? If so, we can help at First Financial.
Contact us today to learn more about our auto loan requirements or to fill out an application.