Most people think that without credit history a person cannot get a car loan. This statement holds true for a lot of companies which do not give car loans to people with a bad credit score. No doubt that having a good credit score is important to avail a car loan, but a person can still get the loan if he does not have a credit history. When a person does not have credit history, the best thing for him to do is to get a pre-approved car loan. High rates of interest are the major disadvantage a person faces in this case.
The following steps can help a person get an affordable car loan without credit history -
Examine Credit Report - A person must examine his credit report in-depth to know his current financial position. This process will help him find out mistakes, if any, in the report and get them resolved.
Pay your bills - One should always pay all their bills and the amount on the credit card statement before applying for a car loan. This payment will help him increase his credit score and can make him eligible to get the loan.
Get a Cosigner - Cosigner is a person who agrees to pay for your car loan in case you fail to pay it yourself. Banks ask people with a bad credit score to get a cosigner with a good credit score in order to get the loan.
Make a Down payment - Down payment is the amount a person pays initially to buy a car on credit. For example - To buy a car, one pays 10% of the total amount upfront and for the rest 90% he takes a loan. The 10% he paid is called the down payment. During the process of car loan approval, banks may ask a person for down payment of a good amount.
Ensure a Stable Employment - A person should have a stable source of income in order to get a car loan. Before approving the loan, the bank will check his employment stability. The bank expects a person to earn a minimum amount of income every month to qualify for the loan.
Do your Research - Before applying for a car loan, a person should do his personal research well. He must figure out which companies provide car loans without credit history and compare their quotes. There are well known and reliable online websites which provide people with expert advice and allow them to compare different quotes provided by different banks easily, saving them a lot of time.
The above mentioned steps can help a person get a car loan with no credit history. Down payment, cosigner, stable income, etc are some points which assure the lender or the bank that they will get back their money on time.
Even though it is possible to get the above mentioned type of car loan, it is advisable that people always keep a good credit score. A good score will save them from a higher rate of interest and also ensure that they get their dream car.
Author- Sravan Kumar