What You Should Know About Auto Loans
So you've finally decided on buying a new car, but have no credit history. Believe it or not, you do have options in getting a car loan with no credit history. If you have no credit history, you will need to be a bit more creative than those who do, but that doesn't mean you have to resort to a dealer offering huge markups or high interest rates. You will need to have strategies to get the car loan you need with the credit history that you have, or don't have. Here are the top 3 auto loan options for people with no credit history. While you consider these, remember to keep working on your personal credit!
Check with the dealership and shop around. A dealer may be able to offer you better financing on the car that you want, especially if you want to go with the previous years model. Once you have decided on the make and model of the vehicle you desire, look around at both new and used models and the deals being offered at dealerships. Remember you will get the best deals later in the model year than earlier as the dealers need to clear off unsold inventory from the lots to make room for the new models coming in. At that point, they are ready to make deals just to get the space. The shopping around part refers to more than just the vehicle: shop around for an interest rate you can afford and be realistic about how much you can pay month. Don't sign up for a loan you will have to struggle to pay each month, that you do you or the credit you are trying to build no good. A bigger down payment will also help you make a deal beneficial to you.
Get a co-signer and a bank loan. If you don't have the credit history to get the car you need, you might want to look into getting a co-signer for a bank loan. This is someone with a good credit history who can co-sign your loan. A co-signer is a guarantor for the bank loan someone the bank or lender can come to if the loan is defaulted. A co-signer will help you get a lower interest rate if you have no real credit history, but they will be responsible for the full amount of the loan if you fall behind on your payments. This make many people reluctant to sign, so you'll need some who trusts you, and you need to be worthy of that trust.
Try a local credit union. If your job has a credit union, check with them, even if they don't find a local credit union and apply for credit. Credit unions will be more flexible than traditional banks, and more willing to listen than a national branch or one that covers several states. Many will also offer loans that specifically help those with little credit but who they consider good risks. Different financial institutions offer different terms and interest, so you don't have to take a high interest loan, you can shop around and see what others might have to offer. Don't be in a hurry, make the deal that will be best for you, your finances and your developing credit.