You realize that you need to purchase a vehicle, only to discover that you have little to no credit history. While it’s great that you don’t have damaged credit, you may have just as much trouble obtaining financing as someone who does. This is because lenders have no way of knowing whether or not you are a loan risk.
Finding a dealer on your own is a time consuming process, and can be risky if you are trying to locate one who will work around your bad credit. Because of this, you may be tempted to go with the first one that is simply able to approve you. But that can be dangerous.
The latest auto delinquency report from TransUnion shows an improvement in the percentage of auto loan delinquencies during the second quarter of 2015 when compared to the same time in 2014.
Selecting a vehicle to purchase takes time and research. And when you have finally found the vehicle that meets all of your needs, it can be very disappointing when you find out that your credit rating keeps you from getting what you want. So, when you are dealing with damaged credit, it is in your best interest to find the dealer who can handle your unique credit situation first, and find out what you can afford for your monthly payment. Once you know what vehicles you qualify for, you will have a clearer idea of what you can choose from.
When looking for ways to repair your credit, you may have not considered an auto loan as the first step towards that goal. It may not seem like it makes a lot of sense, since a vehicle is a big purchase, and the chances of being approved seem like they would be very low. But the fact remains that sometimes you simply cannot wait to improve your credit rating before making a vehicle purchase. When you are dealing with an unreliable vehicle, you run the risk of either losing the job you have, or are severely hurting your chances of finding a better one.
Here are the basic qualifications and requirements that greatly improve a person’s chance of getting pre-approved for a car loan.
Although more lenders are increasingly willing to work with credit-challenged borrowers, most are balancing this by requiring that borrowers have actual equity (cash down, trade equity) in these loans.