With the booming auto industry, new vehicles are being introduced into the market on a yearly basis. Many of these vehicles come with a costly price tag, especially the luxurious vehicles. The best option for many people is to get an auto loan to pay for their vehicle. For those of us who don’t have a credit history, or those who don’t have a good credit rating; it can be tough getting approved for a loan. Most financial institutions prefer to have a co-signer who is willing to sign on your file, saying that you will be able to pay off the loan. The co-signer is basically the guarantee on the loan.
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You would not need a co-signer if you have a good credit rating, because your file shows that you are a trust-worthy borrower. Now, the issue is with those who don’t have a good credit history. If you are one of those people, you should not worry at all. There are many possibilities to getting approved for an auto loan. The one big mistake people do is, only consider the main financial institutions for loans. Keep in mind that, these large banks will be very hesitant to offer a loan to someone with a bad credit rating. They always have strict rules and regulations. Some banks will refuse you even if you have a co-signer. Not to mention the interest rate they will charge you on your car loan.
This is not only a problem for those with a bad credit history, but also for those who do not have a prior credit history. When a lender pulls up your file with the credit bureau and see’s no level of trust, they will be extremely reluctant to offer a loan. In this case, you will be required to have a co-signer who has a good credit rating. If your co-signer does not have a good credit rating, it will look very bad on your file, and sometimes you won’t even get approved. Instead of going to the major banks in the industry, you should pay some visits to smaller firms. Smaller firms will be more willing to give you a loan if they see you have a stable job. You sometimes might need a co-signer, but the chance of getting approved is much higher.
Smaller lenders may charge a higher interest if you have a bad credit rating, mainly because they feel you are not as trust-worthy as someone with a perfect rating. You have the option of applying for an auto loan with no co-signers. Auto companies and car dealers are now offering financing on their vehicles through themselves. There is no need to go to a bank; you can simply deal everything through the dealer you purchase the vehicle from. In some cases, you do not need to put a down payment on the car loan. In essence, you can get approved for an auto loan with no co-signer and no down payment.