January 29 2023,
If you have no credit or bad credit, purchasing a new vehicle can be challenging. However, even if your credit history is not stellar, with proper planning, there are several ways to buy a vehicle.
Here are some tips and steps you can take to set yourself up for success when preparing to finance a new or used vehicle:
- Check your credit score a few months before applying for the loan so that you have time to improve it.
- Save up some cash in order to make a bigger down payment. This will significantly improve your chances of getting approved and will also help you get better interest rates.
- Get pre-approval from a bank. If the bank approves your loan, the chances are your dealership will too.
- Look for more affordable vehicles if you don’t have a credit history. The smaller the loan amount, the easier it will be for you to get approved.
- Consult a Dilawri Finance Manager to understand your credit situation and discuss your best options for getting a vehicle loan.
WHAT DOES BAD OR NO CREDIT MEAN?
Your credit history determines your ability to pay the loan on time or according to the payment plan, based on your history of loans and financing. Thus, creditors will review your credit score before lending money to predict how likely you are to pay it back in time.
If you have no credit (loan repayment) history, then you are an unknown quantity to the lenders, and they have no way of knowing how good or bad you are at being financially responsible and making payments on time. Having a poor credit history means you’ve struggled to pay some previous loans in your past, which can make it challenging for you to get approved for financing.
FINANCE YOUR CAR PURCHASE WITH POOR OR NO CREDIT
If you have no credit history for your first car purchase, you’ll need to do adequate planning and research because it’s a decision that you shouldn’t rush to make. Here are a few important pieces of information to consider before you apply for financing:
DILAWRI FINANCIAL SERVICES
Whether you’re looking to lease or finance, Dilawri offers a range of affordable and flexible financing solutions that have been developed to serve a range of credit profiles. For example, they provide leasing options for students and new immigrants who have no credit history.
CREDIT UNIONS
Credit unions are financial institutions that aren’t profit-oriented and offer financing options suitable for buying a car with bad credit. However, such unions are designed to assist their members, so you would need to become a member of the credit union before you can make use of these services.
Despite being a viable solution, some disadvantages include limited accessibility and limited financing, which may eventually limit your automobile choice. Besides that, you need to be aware that you will have to be a union member and check the terms and conditions tied to the membership.
CO-SIGNER
A co-signer is a person with a good credit history who can guarantee your payment ability. The co-signer signs the loan documentation and becomes legally responsible for your capability to pay back the debt.
Be mindful that the co-signer becomes liable to pay back the debt if you fail, which puts them at risk. Therefore, finding a reliable co-signer to improve your credit history and guarantee repayment might not be easy.
CONSIDERABLE DOWN PAYMENT
Making a big first deposit improves your credit history because it indicates that you can pay significant amounts, thereby improving your chances of getting the financing you want.
However, not everyone can afford a substantial down payment, which requires much planning and financial preparation.
Conclusion
Purchasing a car is a process that entails careful planning, research, and consideration, especially if your credit history isn’t the best. No matter your situation, however, there are several ways to overcome a poor credit history.
Hopefully these tips will help you realize that your situation is not hopeless, regardless of how bad your credit situation might seem. There are ways of repairing your credit score or building it up from scratch.
