It has oftentimes been said that having no credit is as bad as having poor credit. This is especially true when it comes to applying for a vehicle loan. When you apply for a vehicle loan or financing and you do not have a credit history, getting approved can be extremely difficult because of this. Without a credit history, lenders have no idea whether or not you are trustworthy and can pay back the money they loan you. Even if you are employed, and they are willing to take the risk, they may require that you have a co-signer for the loan.
As unfair as this may sound, it should be easy to understand why, considering that your credit history reveals how well you took care of your financial obligations to different creditors. If they do not have this information, it is difficult for them to determine how creditworthy you are. Fortunately, despite the difficulties involved with obtaining a loan for the first time, it is not impossible. The following information should be helpful if you are applying for a vehicle loan and have no credit.
Save up so that you can put down a large down-payment you will have a better chance getting a loan if you can afford giving the lender a larger than normal down-payment. This shows them that you are committed to purchasing the vehicle and that you are willing to work harder for it. Other factors to consider include:
Show the bank or lender as much information as possible – make sure you have a copy of your bank statement, a document that verifies the bills that you pay such as a phone or utility bill, and several paystubs from your place of employment.
Ask if the dealership offers their own in-house financing if you have already applied to a bank and been turned down, your next option is to talk with the vehicle dealership and see if they offer in-house financing. The interest rate will most likely be higher because you will be viewed as a credit risk, but having this option is better than not having one at all.
Once you get your loan, you want to make sure that you make your monthly payments on time until you have completely paid it off. This will go on your credit history and hopefully be the start of an excellent credit history so that you do not encounter any difficulties getting a loan again in the future.