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No Credit Auto Loan - Taking the Mystery Out of the No Credit Auto Loan

instant credit repair increase your chances for approval

Description: Increase your chance of approval and know what to expect from no credit car loans.

Despite an avalanche of colorful direct mailers, and repeated late-night TV commercials, it isn’t easy to get a car loan with no credit. And there’s a big difference between “every application accepted” and “every application approved”. But knowing what to expect in advance can prepare you to get the best possible deal and avoid some of the scams.

Before Applying for A Car Loan

Before you take your colorful sweepstakes entry mailer to the dealer to see if your magic key fits the free car (yeah, right), do a little homework. Check your free online credit report for errors and invest in finding your 3-bureau credit score.

Instant Credit Repair

If there are errors on your credit report, you will want to try to resolve them before applying for a car loan. If possible, pay down credit card balances to an amount below 50% of your limit. If you’ve noticed some good references aren’t reported, contact the creditor to ask about getting them reported. (For some reason, creditors are a lot quicker to report the bad than the good.)

Credit Score and New Car Financing

If your credit score is over 680, you’re considered a prime borrower, and probably won’t have problems financing a new car. If your score is between 550 and 680, you can qualify for a “bad credit car loan”. This usually means a higher APR and a larger down payment. Below 550, you probably won’t qualify for a new car loan.

Increase Your Chances for Approval

Try to find out the financer’s criteria for approval before filling out an application. Repeated inquiries can lower your credit score, even if you don’t take out the loan. So, especially if your credit is borderline, you need to start with the option that is most likely to result in approval. You can also find online lenders which may have less stringent criteria than dealers.

Used Car Financing and Dealer Networks

Some online sources specialize in auto loans for people with no credit. You can get preapproved for financing, then take your preapproval documents to one of the dealers in the network and choose your car. This can be a good alternative. You may also find a local “buy here, pay here” dealer who offers his own financing.

“Buy Here, Pay Here”

These dealers can offer financing in-house, or may be affiliated with an off-site lender.
They are often a last-resort solution, and are used to dealing with credit problems. They may be sympathetic to a need for a lower down payment (especially if you’re a repeat customer), but they won’t be sympathetic to late payments. The cars are often obtained at auction, and the down payment reflects the total amount they paid for the car. Sale price is often significantly higher than Blue Book value. Cars are often equipped with remote “kill switches” that prevent them from starting if payments are late. While most buy here pay here dealers are quick to repossess, others may appear to tolerate a delinquency—until just before the car is paid off. Then they repossess it, ending up with both the car and almost all the payments.

No matter what your credit status is, doing your homework can prepare you to get the best car at the best terms, and build your credit so you can get an even better deal on your next car.

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