Harrisonburg Auto Loan Rates: Can You Buy A Car with No Credit?
You’ve got a good job, you’re paying your bills on time, and you’ve even got a nice down payment that’s just waiting for a new vehicle you want to buy. So, what’s missing?
A credit history.
In the world of finance, a credit history is everything. It’s how car dealers and banks determine your credit risk and Harrisonburg auto loan rates.
That’s why it can be difficult to buy that first car. You’re not alone. Up to 100 million people in America have no credit or very little.
The good news is the situation is temporary. You just have to work your way through it the first time and you’re done. But what’s the best way to do that?
We’ve got 5 strategies to consider to help you get you into that new car.
First, Check Your Credit History
Even though you may think you haven’t built up a good credit history, it’s best to check it. In fact, the Consumer Financial Protection Bureau recommends a credit check before making ANY major purchase.
And, by law, every American is entitled to one free credit report each year. Take advantage of it! Find out exactly what’s on your credit history. And, because 25% of credit reports contain errors, this is a good opportunity to find any possible errors and correct them.
Once you know exactly where you stand, consider the following strategies to get auto financing.
Co-signer
This approach uses the co-signer’s good credit history as leverage for you. It’s a good deal for you, but risky for the co-signer! Here’s why:
• Late or missed payments go on their credit history, too, dragging down their score.
• If you default, the co-signer is responsible for your loan.
• The loan balance will be counted as part of the co-signer’s debts. So, if they apply for a loan, it will show up as their debt.
Not many people will jump at the chance to take on that responsibility. You must be an extremely trustworthy person to have a co-signer on an auto loan.
Look into Alternative Credit Data
Another possibility is a program called Experian Boost sponsored through the credit history company, Experian.
When you sign up for the program, Experian gives a company access to your online checking account records which sifts through your account payment history. It will give you credit for timely, recurring payments. Late payments are ignored.
You can discontinue the service whenever you like. According to creditcard.com, credit scores average a 13-point increase with the service. To learn more about the program click here.
Dealer Financing
Some dealerships have programs specifically designed for the recent college graduate or student who have yet to establish credit. Check local dealerships and ask.
For these programs, other factors are used like, income, GPA, and down payment amount to determine a lending decision.
Marketplace Loans
With this type of loan, a broker will take your personal finance data, as well as the size and term of the loan that you want, then shop for investors.
What’s important to know is not all brokers work with borrowers that haven’t established credit yet. You also want to carefully research brokers. Because you’re sharing sensitive personal information, go with brand name brokers who have a good track record of success.
Ask them how they share your information. How much will they lend to a no-credit borrower? What kind of rate range do they have? Find out what happens after the loan process is over.
The bottom line is this. It isn't easy to buy a new or used car when your credit history hasn't been established, but it is possible. Use every possible resource to build your case.
Financing options may be limited but you can find a lender who will work with you.
Looking to buy a new or used vehicle? Stop by Joe Bowman Auto Plaza to see our wide inventory of cars, trucks, and SUV’s. Talk to our finance department to learn more about your best financing options and Harrisonburg auto loan rates.