If you’re asked for a lending fee, a “pre-approval fee”, or anything other than a down payment before you can get the loan, odds are you’re dealing with someone who isn’t on the up and up. By the way, down payments go to the seller, not the lender.
Legitimate lenders make their money off the interest as you repay the loan. Anyone trying to get a chunk of money out of you up front – in all likelihood – isn’t planning to wait around for the delayed gratification associated with collecting interest payments. They’ll take your “prepayment fees” and never come through with the loan.
No Credit Car Loans: Alternatives
A parent, a more well-established friend, a grandparent, or simply a guardian angel can be enlisted to co-sign a loan on bad credit home loans your behalf. That individual agrees to assume the loan if you default. This, in essence, has the effect of making them your lender. A particular advantage of this is if they have really good credit, you can avoid paying the higher interest rate a no credit auto loan imposes. Plus, you’ll derive the added benefit of establishing a credit history for yourself.
The downside is if you run into money problems and the loan goes sideways, your relationship with that person will be pretty much ruined too. Remarkably, something about paying off a car for you, a car they never wanted in the first place, has a tendency to sour people’s opinion of you. If you go the co-signer route, make sure you’re very solidly in a position to fulfill your obligation.
A similar method is to work out a private financing arrangement with a private seller, or a smaller dealer. Often sellers are willing to retain title to the car and tote the note, if you’ll pony up some cash up front and can demonstrate a ready ability to pay.
If you have something of value that interests the seller, you can offer it as collateral. If you’re in a situation where you have a lot of cash, or a very strong income – but no credit, you can sometimes negotiate a deal based on those assets. Student and/or military status can often get you special consideration for a car loan as well. Many lenders are willing to be creative, if they have a reasonable assurance the loan (and the interest) will be paid.
If you’re in a situation that might require you to go this route, to ensure your acceptance make sure you have a checking and a savings account, and the checking account does not have a record of being overdrawn. Department store credit cards and gas station credit cards can be useful toward establishing a credit history too.
If you’re diligent about doing your homework and making sure you can repay the loan, getting an auto loan with no credit can be a good step toward establishing, or re-establishing credit
A good job history and a steady income are important. If you’ve only been on the job a few months, it’ll be difficult for you to be taken seriously for any kind of loan.
With so many people having credit problems these days, the no credit auto loan is enjoying a considerable amount of popularity.
Similarly, if you have no credit history at all, you’ll be expected to pay a higher interest rate because you are, in essence, an unknown quantity.
If the lender passes the BBB sniff test, observe how readily live communication with them can be accomplished. Particularly in the case of online lenders, you’ll want to make sure there is some way to physically get in touch with them. Phone numbers and street addresses only please…