Have you ever been denied to take a car loan? This might have happened because of having poor credit history. If you have a poor credit history or do not have any credit history to show, it may be hard for any financial institution to approve your auto loan application. You may not know why lenders look at your credit history before they can approve the application. You may wonder why the lenders cannot act on your current situation instead of focusing on your past history. This article offers you some of the reasons why lenders like considering your credit history before approving your application for a car loan.
Assess if you are a high risk borrower
When you apply to borrow a loan from any lender, the first thing they would want to know is the level of risk they will put themselves into by giving you the loan. To determine this, lenders have to check at your credit history to find out if you are a less or high risk borrower. They will check whether you pay other loans you might have borrowed in the past to assess your ability to repay what you are borrowing. The only source of information for them is your credit report. By looking at the history, they will have a clear picture on how responsible you may be in repaying the car loan back. In case they find any of these issues in your credit history, chances of qualifying for the loans are minimal.
· Several open accounts
· Charge offs
· Bankruptcy declaration
· If you had any of your items repossessed
· Many tardy payments
· Accounts in collection
In case you do not have any credit history to show, potential lenders will not be able to make assessment of your borrowing behaviors. It is a fact that they will also have no valid reason to deny you the car loan, but they also do not have any form of evidence that you have the ability to repay the loan within the stipulated terms and conditions. So, if you do not have any credit history, this is almost the same as having bad credit history.
How to get a loan with no or bad credit history
Despite that it may be hard to get any form of financing from a credit union or bank if you have a bad credit, there are lending resources available for you.
Buy Here Pay Here Dealership
These dealers provide financing without considering information from outside parties. This means that even if you have a bad credit history, they can approve your loan if you pay some down payment, confirm you have consistent income or provide a driver’s license. If you offer any of these proves, chances of your credit history being checked are minimal.
Qualified special finance dealers
There are car dealers who collaborate with lenders who are ready to provide financial support to buyers with poor credit. Getting a car loan from these dealers is a great way to start building your credit history again.