Statistically, buying a car is going to be your second largest expense after the cost of buying a home. Unfortunately, in most cases, you need a good credit score to qualify for a car loan, but there are ways of working around this. Sometimes it only takes a bit of research to know where to look for both financing and the car you want to drive.
However, if you have no credit or poor credit, bear in mind your options are going to be significantly lower than if you had good credit. These tips just might help you drive away in the car of your dreams. It’s all about understanding why no credit and poor credit financing are harder to find.
Understand Why Poor Credit Car Finance Can Be Hard to Find
While it is not fun to try to finance a car once your credit score has bottomed out, it’s important to understand why most lenders won’t underwrite a loan for you. It’s all about trust rather than just your credit score. They are lending you thousands of pounds and unless they get it back, plus interest, they will quickly go broke as well. If you have a history of not paying your bills in full, or timely, that doesn’t promote a great deal of trust in your ability or willingness to repay the loan.
Even so, you can find poor credit car finance if you know where to look. Be aware that your interest rates may be a bit higher, but that is the price you may have to pay if you’ve neglected your bills. It’s a sad fact of life, but the availability of finance for those with less than exemplary credit scores is well worth the few extra pounds to many car buyers.
Understand Why No Credit Car Loans May Be Just as Difficult to Find
You may be wondering why no credit car financing may be just as difficult to find as poor credit car finance. After all, you are just starting out building credit and you don’t understand why you are being faulted because of those who couldn’t pay their own bills. Typically, you can’t really lay the blame on them because you are an unknown entity. There is no way a lender is going to be able to predict whether or not you will pay them back, so they are taking on a greater risk than they would with someone who has established a good history of repaying loans.
Sometimes, it is possible to find car dealers who will offer financial services as one of their services and will underwrite the loan themselves. Other times, they network with subprime lenders willing to take on riskier loans. Nevertheless, if you ever have hopes of getting better deals on financing, it is imperative that you pay your car payments in full and on time each and every month. Your credit history, or lack thereof, will have a huge impact on financing in the future. Don’t lose this opportunity to build good credit or restore your credit. You are given an opportunity to earn the trust of lenders so use it wisely.
© Isabel Shuter 2018