An Auto Loan Guide for the up and Coming Car Owner
Contributed by Rachel Johnson
Auto Loan
If you have little or no credit, an auto loan is a great way to establish some good credit. If you need a new vehicle and you can afford a monthly payment, go for it, apply for a auto loan.
Getting an auto loan with no credit
If you don't have any delinquencies or collections on your credit report, chances are you'll qualify for an auto loan. Lenders have gotten much more lenient about credit ratings, and when you have no credit as opposed to bad credit, qualifying should be quite easy.
What to expect from a no credit auto loan
Because you have no established credit you may need letters of credit from utilities, personal loans, etc to show some positive payment history. You also may need a co-signer, although that will depend on your financial information. Sometimes, if you have a more than adequate salary the lender will waive the need to have a co-signer on your auto loan.
Another way you may be able to qualify for an auto loan with no credit is to have ten to twenty percent of the vehicle's worth to put down. When you put money down on a car, you're showing the lender that you intend to take responsibility for the vehicle because you have a vested interest in it. When you don't have credit, the down payment just helps a lender feel more secure giving you a auto loan. And, it will also decrease your monthly payment, and reduce the liability of the lender!
