One of the biggest problems that car buyers have are credit issues. Maybe they fell behind on a payment because of a lost job or a sick family member, there are numerous ways to find a mark on a credit report. There is, however, another issue with credit and that is some people don’t even have it.
This is typical with newer buyers, say students or newly weds, who are entering the world and discovering that weird catch twenty-two of needing credit get a loan but having no credit history. Thankfully, there is a way around this. The recent uptick in financing after the recession has caused dealerships to offer more deals for people, and that includes those with no credit. It is entirely possible to apply for a no credit auto loan.
Now, the next question (and the right one to ask) is ‘what is the catch?’ Since the person asking for this loan doesn’t have any credit history to determine if they are good for the payments, the dealership is taking a much larger risk in issuing a loan to this individual. For that reason, the dealership typically asks for a larger down payment on the car. Another stipulation is that the fee for any late payments is larger.
For these reasons, when entering into a no credit auto loan, be sure to be aware of the deal and your own finances. This loans can be a real blessing for people starting out and needing to build stronger credit as keeping up with the payments will help with gaining positive credit. There are certainly risks, but for the responsible person, there’s genuine benefit.