No Credit Check Auto Loan: All That Glitters Is Not Gold

The moment you think of buying a car, you will have to consider your credit score. If you have a bad credit score, many well-wishers will suggest you to apply for a no credit check auto loan. It is considered as the ideal way of buying a car when your credit score is weak.

Quick loan quotes and simple approval criteria are few of the biggest perks of the loan. Also, another benefit is that lenders do not undertake any kind of intensive background check before approving your loan. But, is a no credit check auto loan beneficial for you? Remember that not every ornament is made of gold and it is unwise to make a decision on the basis of appearances.

Every Coin has Two Sides

When you have a bad credit score, it may seem that lenders have shut their doors for you. If you think that there is no lender to help you out, you might consider applying for a no credit check auto loan. But, before you act on your decision, consider the following points:

· Question of Legitimacy

You need to provide your social security number and bank account information to the lender for checking your credit score. By checking it, he will be able to ascertain your creditworthiness.

When you apply for a no credit check auto loan, the lender will not demand your social security number. It is because he doesn’t need to check your credit score. But, if a lender asks for your confidential information, be cautious. He may not be a legitimate lender. And, there is a high probability that he will steal your identity and use it for illegal purposes.

· The Issue of Down Payment

The lender assumes a high risk by approving your loan request without a credit check. So, he asks for a high down payment amount. So, before applying for a no credit check auto loan, you have to be ready for making a down payment of a sizeable amount.

· The Loan Term

A no credit check auto loan often comes with a long-term. Car buyers consider it ideal without thinking of the results. They forget the fact that a long-term means making more payments towards the interest amount. But, you must think of it before approaching a lender.

· Consider the Math

If you are ready to pay high rate of interest on the loan, you can get approved easily. The interest rates are set high. It is because it allows the lender to earn profit even if you fail to pay off the entire loan amount.

Break the cycle

In order to increase their business, lenders search for desperate car buyers who believe that they have zero financing options. But, before you apply for a no credit check auto loan, conduct thorough research. Do not think that there is no solution to your problem. The loan may not serve your purpose of buying a car with affordable interest rates. It may prove to be a tempting option, but remember that appearances can be misleading. So, it is wise to read and understand all the paperwork before you sign the dotted line.

Cosigning an Auto Loan: Is Being a Cosigner All Risk and No Reward?

We all might have experienced a situation where a friend or a family member asks you to become a cosigner. Before saying yes, it is best to know what you are getting into. Typically, when you consider cosigning for an auto loan, you are agreeing to repay the loan amount if the primary borrower stops making payments. While you agree to it, the risks outweigh the benefits. You may consider it as a way of improving your credit score, but do not delve into it before fully understanding the risks associated with it.

Risks associated with Cosigning an Auto Loan

1) Damaged Credit Score

Earning a good credit score requires decent effort. When you become a cosigner, any form of delay or non-payment of the auto loan will reflect on your credit report. Inability of the primary borrower to make the payments can decrease your credit score. Also, your debt-to-income ratio increases when you become a cosigner. Ideally, a debt-to-income ratio should not be higher than 36 percent. Being a cosigner increases your debt against your income. And, your credit score decreases due to increased debt amount. Therefore, if the borrower has a poor credit history, rethink your decision.

2) Enforceable Legal Judgments

When the primary borrower is unable to repay the loan, the lender may take legal action against the cosigner. Also, there is a high probability that you are sued before the primary borrower. It is because you are likely to repay the loan amount fast in order to protect your credit score. In case, the primary borrower is unable to repay the loan, a cosigner’s assets and salary can be in jeopardy as the lender can claim his assets.

3) Reduced Credit Ability

When you are a cosigner, other lenders see you as someone who has already agreed to guarantee a loan. The lenders assume that you are already making monthly payments on the loan you have cosigned for, thereby leaving little money to make payments for a new loan. Thus, a new auto loan approval might become difficult for you.

Does it make sense to become a Cosigner?

While it may not be a financially sound decision to become a cosigner, you can agree to it when you are in a position to afford the risk. If you have a good amount of surplus cash or possess substantial assets to repay the loan amount of the primary borrower, you can think about it. Also, if you will be using the car, it makes sense to say yes.

Cosigning an auto loan may look like a lucrative method to improve your credit score. However, it can mean all risk and no reward when you have to deal with a damaged credit score, enforceable legal judgments and reduced credit ability.

4 Tips to Get the Most Out of Your Bad Credit No Money Down Auto Loan

Imagining a world without a car seems quite impossible. A car has become a necessity that is integral to our lives. Sorrowfully, many car buyers find themselves in a state of mayhem due to the compulsion of making a down payment. A down payment makes it difficult for car buyers to arrange a big amount of money in a short time-frame. To add to that, there is a possibility that a bad credit score or an average credit score can diminish the chances of obtaining an auto loan. However, there is always a way out. A bad credit no money down auto loan is the best option for you. But, before you avail the loan, make sure that you leave no stone unturned to educate yourself on all the important details.

The following tips will assist you in getting the most of your bad credit no money down auto loan:

1) Trade-In Your Old Car

Many a times, trading your old car can act as a replacement for a down payment. Once you have agreed to trade-in your old car, the amount equivalent to your car will be deducted from the total loan amount. It substantially reduces your burden of the monthly payment amount. Thus, by trading your old car, you can maximize the benefits of your bad credit no money down auto loan.

2) Get a Co-Signer

When you suffer from a damaged credit and cannot spare the amount for a down payment, getting a co-signer greatly helps your situation. If you are unable to make payments, a co-signer is equally liable to repay the loan amount. A lender will be more likely to grant you a loan if you have a co-signer with a rich credit history. Therefore, in order to make the most of your bad credit no money down auto loan, make it a point to get a co-signer.

3) Aim for Reasonably-Priced Cars

It is much easier to obtain a bad credit no money down auto loan if the loan amount is reasonable. If you aim for cars which are way out of your league, it can become difficult to get a loan. Additionally, opt for a loan with a shorter term. A realistic amount which can be repaid in a short time-frame can reduce the overall interest on your loan.

4) Present Evidence of a Stable Income

Regardless of a bad credit history, evidence of a stable income can boost your chances of getting a loan. Stability in the form of a regular job, a regular income source and a stable residential address can increase your credibility. Present pay-stubs that prove you can repay the loan within the stipulated time-frame.

For a car buyer with a bad credit score, getting financing options without a down payment is possible. Keep the above tips in mind to get the most of your bad credit no money down auto loan.