No Credit and Bad Credit Auto Loans. How it works.

Whether you read it in the newspaper, your local auto trader magazine or on the internet, the promises of "all applications accepted", "everyone approved" and "Tote the Note, We Finance Everyone", from ads that promise you a car without checking your credit report undoubtedly sound pretty good. Whatever your current financial situation might be, there are probably thousands of people out there just like you with either a poor credit history or no credit history at all that dream of driving a new car just by filling out the application or stopping by the dealer. After all, if it's on the internet, it has to be the real deal.

Remember the old saying? It goes something like this: "If it sounds too good to be true, it probably is." Unfortunately, it's just as true now as it ever was. When it comes to no or bad credit auto loans, you give up a number of things in order for the lender to ignore your poor or missing credit. Here is why:

There are a number of things that a bank or lending institution that doesn't offer no credit auto loans will look at in order to determine whether or not they will loan you money. Specifically, they will examine your credit history, your credit application and your down payment.

Your credit history is divided into the categories of habitual or situational credit. Applicants who have never paid an account on time will find it difficult getting a loan request approved – other than no credit auto loans. This type of credit is generally considered to be habitual bad credit. On the other hand, there are many instances where a job loss or major medical problem caused a situation in which it was difficult to pay bills. This is known as situational bad credit. The person with situational bad credit will find it easier to obtain credit, although the interest rates will probably be higher than normal.

Information on the credit application can also help or hurt your chances. Low income and a spotty job history can negatively impact a credit decision, while above average income and a solid job history can help overcome a somewhat negative credit history.

Down payment is also important. When a bank sees a large percentage down, they are more apt to approve your loan and possibly even give you a better interest rate. A larger down payment means that both you and the bank have an equity situation in the car. The more you put down, the better your chances will be that the loan will be approved and you won't have to settle for one of those bad credit auto loans.

But without knowing your credit, job and down payment situation, how can the ads for no credit auto loans make all of those promises? The truth is that they can't. Most of these bait-and-switch ads have a lot of fine print at the bottom of the page or at the end of the application process. It's also important to realize that an accepted application is not an approved application.

If you're truly interested in reestablishing your credit, you shouldn't be considering one of those no credit auto loans, but looking for a bad credit car loan web site that can legitimately help you improve your FICO scores. Many of these sites have helped thousands of customers, through their affiliate dealer networks, drive new or low-mileage, dependable used cars while rebuilding their car credit.

Be sure to find a web site that is highly rated by the Better Business Bureau. This means the company is dedicated to customer service and to resolving customer complaints in a timely manner. The best of these web sites, unlike those that offer no credit auto loans, can also help you in your car buying decision. They do this by explaining the application and buying process and furnishing you with calculators and budget tools. Once you're ready, they can help you get back "on the road" to better credit.