Liberty Auto Loan: Financing a car with no credit… No problem?
Car loans are made on the basis of good faith, which is to say that a lender accepts a borrower will make monthly payments on time, through the end of the loan’s term. People who repay their debts on time, and in full, will acquire a good reputation as borrowers and will, quite often, be solicited by lenders to borrow more money. On the other end of the spectrum, people who routinely fail to pay their debts, will find themselves with a poor reputation and will find themselves scrambling just to find one lender willing to take a chance on them. People in this situation are identified as having no credit, which is crippling in an economy that depends so much on the movement of money through the use of little plastic cards – just try financing a car with no credit!
“No credit” has a value, though it’s a value no one would want. The value is in an individual’s credit score, which lies between 550 and 540 depending on lenders, and numbers below this are where almost every lender will deny a car loan application out of hand. Financing a car with no credit, when an application is not denied, comes with a very high interest rate, a minimum down payment (determined by the lender), and certain loan fees, which vary widely from lender to lender. Seeking no credit auto financing also limits the borrower’s choices on cars. At this point, beggars can’t be choosers and must settle for the most reliable vehicle their budgets can tolerate.
Choice of cars can go a long way to making no-credit financing possible. An irresponsible consumer is best illustrated by trying to finance a new Mercedes while, at the same time, negotiating no-credit financing. A loan agreement of this sort will not be taken seriously, plain and simple, and it’s up to the consumer to make a swift return to reality. For someone financing a car with no credit, looking at the most economical choices are the best way to begin a car loan agreement. Used cars are a safe bet but, even in this area, the consumer has to do some smart shopping. Lenders will not, generally, finance a car that’s more than 4 years old with over 70,000 miles on it. Condition of the car, apart from miles and age, also helps to convince a lender that the vehicle is worth financing.
While there may be no choice for the consumer to replace a car, anyone with no credit who can put a car purchase off, must do just that – put it off! Running on a tight budget, and adding the stress of a car loan with no credit, just pours the gas on toward financial disaster. There’s no reason anyone has to live with no credit. It’s a fixable problem when the consumer takes matters into his, or her, own hands. Strict budget planning is the first step, which may include a visit to a credit counseling service. Credit counseling services can help the consumers manage existing debts, pay them off in full, get spending under control and, even, put money aside for a rainy day.
Credit counseling is a uniquely helpful service, but the consumer must be as smart in selecting one as he, or she, is in picking out a car or lender. While many services are in business for the consumer, there are others who work for credit card companies, or worse. Credit counselors that work for a particular lender may not work in the best interest of the consumer forcing them into costly, long-term plans which might get that consumer up a few notches in credit. Other services will simply hit the consumer with a fee, upfront, and disappear.
Financing a car with no credit is a risky maneuver, even when an applicant is approved. The simple refrain for someone looking to purchase a car through financing with no credit is not to. Waiting an repairing credit first is the best solution. If a person can get the job done with a reliable car that isn’t too pretty, yet pay for it in one shot, that individual should go that route. If he, or she, can live the same old car for another year, then that’s what that person should do. Fixing the problem before creating new ones is in that person’s best interest. Through wise spending habits, and smart budget planning, any consumer can turn no credit into a “no problem.”