How Can You Improve Your Chance Of Getting An Auto Loan If You Have Bad Credit?

October 28, 2019 at 7:42 am by Shirley Mitchell | Posted in Financial Planning

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Have you decided that you wish to avail an auto loan? What must you do for improving your chances? From where can you avail a loan for having your dream car? Here are few tips mentioned below that you can follow to improve your chance of getting an auto loan.

Get Hold Of A Co-Signer:

If you visit a bank or a lender with no guarantor or without having any credit history and affirm that you are someone who actually repays their debts, there will be a high chance that you might not get an approval for your loan. But if you get a co-signer then you will find that things are changing. The presence of a co-signer will aid you in practically borrowing with the help of their credit history. You will seem as if you are more trustworthy.

But be very careful because your actions will be affecting your co-signer in the long run too. For example, if you become a defaulter and you are unable to repay your loan, your co-signer will be too responsible for repaying for you. Moreover, if you make a late repayment or miss one completely, it will be going permanently on your co-signer’s credit score and not yours. As a result of this if you decide to opt for a co-signer, ensure that there are sufficient funds for making the necessary payment for your auto loan whenever there is any due.

Look Out For Any Alternative Credit Information:

If you do not own any credit cards or have a mortgage, it means that you actually do not have anything to aid you in building your credit history. But you still will be having your checking account, utility bill, mobile phone and rent. When any traditional proof is unavailable, lenders can use non-traditional one for demonstrating your ability for making timely repayments.

They will be using some credit scoring formulas.But not all lenders will be using this type of alternative credit score model. So you need to perform some research well before you lock into a specific lender. In few cases, you may wish to move past some auto loans and move towards personal loans. These are more flexible and the rate of interests is known to be more convenient.

Opt For Dealer Financing:

Have you come across advertisements such as “no credit, no problem”? So if you have a poor or no credit to show up, you can still avail a loan from an average brand auto dealer? This will depend mostly on the dealer. If it is such a dealership that has a great brand name and great reputation that has connection with a big auto marketer it can be in your profit for making few calls to the financing manager and then get hold of some details on the auto loan. But will they work with anyone who has no credit? If so what will they require from such an individual to offer him this loan? It can be his job history, a co-signer or if you can provide them whatever they ask from you, you might be able to get a great deal. The perfect dealer can also fix you with some great auto insurance.

Think About Community Bank Along With Credit Unions:

 Small community banks and credit unions will be more clement in providing you an auto loan if big banks will not. So you must be aware of where to look for. For example, you may wish to look for lenders who include programs for any first-time buyer. These have been designed for those people who have little or no credit history. As they will look past an individual’s credit score, they can become interested in some other factors such as stability of job, pay stubs, utility payments each month and the reason why a person has no credit. If they find it acceptable, you might become eligible to avail a loan.

Drawing On Your Retirement Account: 

Have you been placing your money into your retirement account, you can draw into that account as well as borrow some money to buy a car even if you have no such credit. If it is not anything that you wish to do when you are thinking about your future, but if you are able to put it back as you have promised yourself then there will be no such harm. No one will ask you any question regarding your credit history, job or any other thing. Remember that some retirement account have penalties as well as fees involved when you borrow. Moreover based on how much you have kept aside, there will be a limit on what you can borrow similar to how it happens with a 401 K retirement plan. So you will wish to make sure that the sum you avail can actually cover the money that you require from your car.Availing an auto loan with no credit history can be a simple thing for doing. It can also take some time. Further with some patience, you will be able to use a great offer. Just find the perfect lender and you will be driving your way between the streets.

 

Shirley Mitchell

Welcome to SOE 2013, I am Shirley Mitchell. Financial Strength is the cornerstone of our success.

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