Get an Auto Loan with No Credit

It's possible to get an auto loan with no credit if you are savvy and determined. With a down payment, good employment history and decent income to support your car payments, insufficient credit doesn't have to be a deterrent to car financing. There are both banks and vehicle dealerships that offer car loans to consumers who simply don't have a credit history. A car loan can even help you build up good credit over time.

Obtain a copy of your credit report. Even if you have very low credit, you should still have a credit report and you'll need to check it for errors or omissions. If you receive a notice that there is insufficient information for your name and Social Security number, that's the same message potential lenders will also see.

Save up for your car down payment to increase your chance of getting a car loan even without good credit. A large down payment will increase your odds of getting a loan.

Calculate how much you can afford to spend on a vehicle. One rule of thumb is that your annual transportation costs, including vehicle payments, maintenance, fuel and tolls, should be no more than 10 percent of your annual income. On a monthly basis, that means your total vehicle costs on a $3,000 income should be only $300. If fuel and repairs are $100, you can potentially afford a $200 payment.

Visit your bank, or if you don't have an account, set one up right away. Then discuss a line of credit or auto loan with the branch manager. Let her know your credit history, income, savings and assets and she will determine if the bank can make a loan for you. An auto loan from your bank is the first choice and you may get lower rates than when you buy from a dealer.

Visit your auto dealer with your budget in hand and the loan offer from your bank if you received one. If you didn't get a loan from the bank, approach the dealership manager with your specifics and find out if the dealership can issue a loan with your vehicle purchase. Be sure to emphasize your down payment, which will hopefully help you secure a auto loan with no credit.

Tips & Warnings

• Consider peer-to-peer lending sites if you are unable to qualify for a car loan through your bank or car dealership.
• Build up your credit and save money for your next car. If you have enough to pay cash, you won't have to worry about qualifying for a loan.
  

By Maria O'Brien eHow Contributing Writer

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Get a Low Interest Rate Auto Loan with Bad Credit

It is possible to get a relatively low interest auto loan with bad credit. There are several steps you should take to make sure you get the most favorable financing available for your credit situation.

Improve your credit rating. If you are reading this article, chances are you looking for a quick fix for your auto loan needs. You might be surprised to find out that there are steps you can take to improve your credit rating fairly quickly. If you are not already doing so, start paying your bills on time. If you are having trouble making payments, see my article “How to Negotiate with Credit Card Companies to Lower Your Monthly Payments.” Try to pay down your balances to less than 50% of the credit limit, and delete recent multiple entries on your credit report. See “How to Delete Inquiries on a Credit Report.” Hyperlinks to both of these article appear in the “Resources” section at this end of this article.

Shop around for a lender. One of the simplest ways to shop for an auto loan is by submitting a quote form online. You can compare multiple offers and choose a low interest auto loan that meets your needs. While you may not receive an offer as low as a good credit customer, you may find that some lenders treat bad credit customers better than others. If you have a long-standing account with your bank, you might also see if the bank would be willing to waive its requirements. The bank may do this if you can convince the bank that you are likely to repay the loan.

Save up for a sizeable down payment. A good rule is to make a down payment equal to ten percent of the purchase price of the vehicle. Lenders are more likely to give you favorable terms with a sizeable down payment, because they realize that you are less likely to default on the loan if you may face repossession of a car in which you have made a substantial investment.

Be wary of high pressure sales tactics. Do not give in to hard sell tactics by auto dealerships. Be sure you know how much car you need and can afford. Remember that the salesman’s job is not to ensure that you receive a fair deal – his job is to make the sale. Car dealerships are notorious for predatory high interest lending.

Tips & Warnings

• If you have bad credit, steer clear of dealer financing. Secure financing before you go to the dealership.
  

By jenajera eHow Community Member

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