For people who have bad credit or no credit, securing an auto loan can be difficult. Any time a person applies for a loan, the lender will run a credit check to assess the risk of extending the loan. Those that have less than stellar credit or no credit appear to be less likely to make a monthly payment, which results in denials more often than not.
However, no matter what your credit may be, there are still loans available if you need to purchase a car. Good Fellow’s Auto Wholesalers has put together this easy to understand guide how to purchase a car with bad credit or no credit.
Purchasing a Vehicle with Bad Credit
If you have bad credit, securing a lease or a loan for a car will be difficult, but it is still achievable. In most cases, the interest rate offered will be higher, as will the monthly payments on the loan. You can also expect to be approved for a smaller amount than if your credit was higher.
Here are a few tips that you can use to improve your chances of securing a favorable car loan:
- Check Your Credit – Reviewing your score in advance of your loan application will give you a great idea of where you stand. It also gives you a chance to correct negative spots on your report to improve your overall score.
- Lower Your Budget – More affordable cars will come with a smaller loan requirement, which increases your chances of being approved.
- Save for a Down Payment – If you have a poor score, putting down a larger down payment will help you get a better car loan. Depending on how much you save, you may even be able to buy your car outright.
- Get Pre-Approval – It’s a good idea get pre-approved for your car loan. That way, you can set a realistic budget long before you start your vehicle search.
- Call Us – We are a specialized lender that caters to people who have poor credit and bad credit. In addition to our years of experience handling bad credit auto loans, we also have access to special programs for those with problem credit.
If possible, it is always better to improve your credit score and place a sizeable down payment to ensure you get an affordable car loan.
Purchasing a Vehicle with No Credit
Applicants that have no credit are a little better off than those with bad credit, but not by much. No credit history means that lenders will have no idea if you can make your payments or if you are responsible enough to follow through with your commitments. This is a common issue for new immigrants and those just getting started.
Learning how the credit system works in the country, as well as choosing a modest vehicle, will improve your chances of being approved for a car loan. Make sure to bring proof of income as well as place a larger down payment to get more affordable monthly payments on your loan. Our used car dealership in Toronto has options specifically made for those with no credit history, which our experts would be happy to discuss with you.
How to Build Your Credit
There are several ways to build your credit. Making local utilities, rent, and telephone service payments on time will help boost your score. If you do have debt, paying it off on time will also improve your score. Another way you can improve your credit is by opening a small credit or bank loan account. By making payments to this account on time and by not going over the account’s limit, your credit score can improve. By taking these steps to improve your score, you will show lenders that you can handle larger loans, which will result in you being approved for larger amounts in the future.
How We Can Help
These tips will help you improve your credit and secure an auto loan regardless of your current credit situation. If you are in need of extra assistance, the auto finance experts at Good Fellow’s Auto Wholesalers are here to help. Give us a call at 1 (855) 581-9590 to find out more.