Canadian car loans can be challenging when you don’t have a credit history. When you apply for financing it can be difficult and frustrating when trying to obtain no credit car loans. New car loans or used car loans, when establishing your initial credit history it can be a catch-22. Same as bad credit car finance, if you don’t have good credit not many places are willing to give you credit, yet how can you ever establish no credit car loans if nobody is willing to give you any?
Understand What No Credit Car Loans Lenders Are Looking For
Since you are looking to establish credit for the first time, lenders can’t look to your credit score to determine whether or not to lend you money. In these situations they have to examine other factors that can help them decide if you are a good credit risk or not. Best auto loan rates are reserved for people with good credit and benefit from better car finance deals.
Down Payments and No Credit Car Loans - Having a good down payment usually results in an instant decision and loan approval when you apply with no credit for car loans. Typically 10% is a good rule of thumb but even less will help you get a no credit car loan. The size of the down payment thus determines the extent to which the lender is protected against the various factors that might reduce the value of the collateral (car) and any lost profits between the time of the last payment and the eventual sale of the collateral. Making a down payment demonstrates that the borrower is able to raise a certain amount of money for their vehicle investment. A down payment with no credit is good evidence the borrower’s finances are sound, and that the borrower is not borrowing beyond his or her means. If the borrower is unable to pay off the loan in its entirety, he/she forfeits the down payment amount. Use a car loan payment calculator in determining a down payment amount.
No Credit Car Loans and Employment History- Another important factor lenders look for in no credit car loan applications is your employment history. They want to see if you are able to hold a job or if there are periods of unemployment. Your ability to hold a steady job can improve the likelihood of getting approved. Tip: always provide a min 3 year history when applying for no credit car loans. No Credit Car Loans and Residence history – Lenders will also view how often you move and whether you rent or own when applying with no credit for a car loan. As with employment history, it pays to have a stable length of residency. Owning a home, even if just jointly with a spouse, carries some weight as well. Tip: always provide a min 3 year history when applying for no credit car loans
No Credit Car Loans and Bank Accounts - You don’t need a credit score in order to open a chequing account at your local bank. Your account history can be a vital component when lenders consider giving you a no credit car loan for the first time.
No Credit Car Loans and Utilities in your name. Even without a credit history, it is possible to sign up for many utilities in your own name. Having an electric or gas bill, telephone, cable, or water service in your name also helps. Just having your name on these accounts won’t establish a credit score, but it can be helpful for first-time borrowers.
No credit car loans and Applying for Financing - Provide honest truthful information when you apply for new car loans or used car loans. Answer all application questions and provide additional information about your financial, employment and residential situation. Lenders for Canadian car loans appreciate having as much information about you and your situation. The result can be the difference of an approved car loan or one that gets declined because of a lack of information especially if you have no credit when applying for car loans.
Establishing a good credit history takes time. There are no shortcuts or tricks that can take to getting no credit car loans. Car finance deals and best car finance rates result from good credit history. Your credit score is based on a number of factors such as payment history, length of time you’ve had credit, and much more. So, while it is important to initially establish credit, it is even more important to take the time to do the right things to maintain good credit.