Guide to Getting a Car Loan Without Credit
How to Get a Car Loan without Credit
The steps discussed below will guide you into driving off in the car of your choice despite lacking credit.
1. Open a bank account
A bank account is a must-have tool when applying for a loan. Open a savings account to store any funds you can get.
2. Save for a down payment
Make this down payment to be as large as possible such that the remaining installments don’t make up a heavy burden. The size of your down payment shows your commitment to the purchase. It is also a sign that you are working hard to bring in money and gives the lender a more candid assurance.
3. Choose the right car
Select a car that will run along your budget, compromise on a few costly luxuries. That finely polished roaring SUV may be all you can think of but it is more important to consider your current financial position. Do not choose a car that will end up giving you a bad credit history. After a credible credit score build up, you can always switch to another car model.
4. Compile your financial documents
Make a copy of your bank statement, paid bills and any other proof of income or employment. This will help the lender believe in your ability to pay a recurring bill in a timely manner.
5. Talk to your banker
Now that you have established the down payment amount and identified the car you want to purchase, try to convince your banker to lend you the car loan. This is because banks are more likely to charge a lower loan interest to their customers as compared to most car dealers.
6. Get a quote
If the bank does not accept your loan request, ask your lender as to how much they are willing to lend you. Make a calculation and estimate how much monthly installments you can afford to pay before accepting the offer. Try to be honest with yourself and make a realistic estimation even if it leads you to settling for a cheaper car. Ask for a quote from different lenders and compare their interest rates.
7. Get a cosigner
A cosigner signs a promissory note that makes them equally liable to your loan debt. You can use your cosigners credit score to qualify for the loan you need. It is important to make timely repayments on your loan to avoid sabotaging your relationship with your cosigner.
Conclusion
The above steps prove that getting a car loan without credit can turn out to be difficult but still possible. After receiving your car prioritize your money into repaying your loan first as opposed to tuning it up. Drive your car carefully to reduce those trips to the mechanic that could disrupt your budget. Create a good credit history that will help you receive even bigger car loans the next time.
