No Credit Car Loans - Getting
Approved with No Credit History |
By Carrie Reeder |
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If you have never acquired a credit card or obtained credit in your
name, getting a loan for a new or used car can be tricky. When
applying for credit, lenders assess your ability to repay the
loan. To do this, they will review your consumer credit report.
If you have no credit history, lenders may request that you
obtain a co-signer, or deny your application. Here are a few
tips to help you secure auto loan financing with no credit.
Apply for a Secured or Unsecured Credit Card
Before
applying for a new or used auto loan, attempt to obtain a credit
card, department store card, etc. Credit is important; however,
getting your first credit card is not always easy. Similar to
auto loan lenders, most credit card companies prefer applicants
to have previous credit accounts.
To solve this
problem, consider applying for a secured credit card. Before
applying for the card, contact the company and inquire if the
account will appear on your credit report as secured. Choose
credit card companies that do not reveal that the account is
secured. To creditors reviewing your report, it will appear as
if you have opened and maintained an unsecured account. This
will boost their confidence in your ability to handle credit
responsibly.
Once you have obtained a secured or
unsecured credit card, carefully monitor your spending. Having
too much debt also has a negative effect on your credit. If you
keep account balances at the maximum limit, instead of
increasing credit score, you will be damaging your score.
Open a Checking or Savings Account
Even without a
credit card or credit history, some lenders consider having a
verifiable checking or savings account as a plus. Because having
a bank account will boost your credibility, you may be able to
obtain an auto loan if you have an account in good standing.
Good standing means no bounced checks, overdraft fees, etc.
Apply for Auto Loan with a Co-debtor
If you are
under 18-years-old, you will need a co-signer to obtain an auto
loan. However, if you have zero credit history, having a
co-signer is an effective method for acquiring credit in your
name. Co-debtors may include any person with a good credit
rating such as parents, spouse, siblings, etc. Individuals who
agree to serve as a co-debtor should do so with care. If the
primary debtor fails to repay the loan, you become accountable
for the debt. |
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