Are you looking to buy a car, but have no credit history? You may think that you won’t be able to get approved for a car loan and have to settle for some old car and pay straight up with cash. However, if you plan and act wisely, you do have some options. Here’s some handy tips.
Get Your Credit Report
Determine where you stand with your credit by getting your credit report and credit score from all three credit bureaus — TransUnion, Equifax and Experian. Make sure that everything is accurate, and if there are any outstanding issues, be sure to resolve them.
Pay Your Bills on Time
If possible, consider holding off on buying a car for at least six months, and do your best to pay your bills on time. This will show financial responsibility to potential lenders and improve your chances of getting a loan.
Evaluate Your Finances
Look over your finances and figure out how much money you can realistically allocate for a car, taking account of car payments, gas, maintenance and insurance. You’ll be more likely to get approved for a car loan if you can put more money towards a down payment, and keep your monthly payments lower.
Have Your Documents in Order When Applying for a Car Loan
Make sure you are well-organized with all of the paperwork you may need for applying for a car loan. This includes such things as proof of employment or future employment (or if a student — proof of enrollment in college or graduation date), references and copies of your credit reports.
Consider Your Bank for a Car Loan
If you’ve been a customer with a bank for awhile, they may be more inclined to give you a car loan with favorable terms. This also applies to your insurance company, for they may offer financing as well. These types of institutions are more likely help their customers, at least more so than a complete stranger.
Co-Signer and Other Options
There are some other options that may lower the cost of a vehicle and improve your financing terms, such as a college grad rebate and first time buyer programs. Also, if you have a family member with good credit and they are willing to back you up financially if need be, you can have them co-sign your car loan.
For more tips and information on the car buying process, we encourage you to follow us on the AutoMax Blog.