For most of us, the global recession has made the chances of securing a loan of any kind fall dramatically. The reason? Lenders are more cautious now more than ever. So, when we need a car, getting approval on a car loan quickly can be a major problem. Thankfully, there are no credit car loans available, ensuring such approval can be secured.
Having a low credit rating is not the killer blow to any loan application. Other aspects, such as income and debt-to-income, are far more influential when it comes to the assessment. What this means is that the chances of getting car loans with bad credit are not so poor as long as the other aspects are in good order.
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There are some steps that can be taken to ensure that everything is in order. Having the required ID to hand, and proving employment and income are essential, but also important is knowing your limits, and not applying for a loans that are clearly too big. Once these aspects are addressed, getting car loan approval with bad credit is very possible.
Advantage of No Credit Loans
A key advantage of a no credit car loan is that the lender is not interested in the credit history of the applicant. So, even if a credit rating is rock bottom at just 300, an applicant has just as much chance of getting approval as someone with a maximum credit rating of 800.
The reason why no credit details are required is two-fold. Firstly, the lender knows that not everyone with bad credit is untrustworthy, and that circumstances might have worked against them. So, granting auto loans with bad credit is not seen as such a major risk.
Secondly, online private lending firms know their best marketing tactic is attracting those that traditional lenders would normally reject. So, just as long as the basic requirements are met, car loan approval with bad credit is possible.
Disadvantages of No Credit Loans
Nothing is free, so despite the fast approval rate and high level of accessibility, no credit auto loans do have a few negative aspects. By and large, these are acceptable compromises, but it is important that they are known.
The biggest disadvantage is, in return for taking on what is perceived to be a greater risk by ignoring credit histories, lenders will charge a higher rate of interest. Offering car loans with bad credit puts their investment at risk, since they are not certain whether the low credit score is a result of bad luck or of frivolous spending habits.
The other issues relate to hidden charges and penalties. The fact is offering car loan approval with bad credit does not give license to go on a charging spree. It is important then to shop around and compare, before deciding on a lender.
Why Not Dealer Loans?
Of course, the easy option is to accept the financing deal that car dealers offer. This may seem the right thing to do, but in fact such no credit car loans come at exorbitant costs. This is because most dealers will tag an extra 2% or 3% onto the interest rate and pocket a tidy profit. It would be better then to get a pre-approved car loan with bad credit and hold all the aces at the negotiating table.
Receiving car loan approval with bad credit can never be guaranteed, but the chances of a successful application are greatly enhanced by having a healthy excess income to cover the extra monthly repayments.
And remember that a no credit car loan is a golden opportunity to rebuild a good credit rating too.
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