The Difference Between Poor & No Credit Auto Loans
No credit or a “thin file” as it is known in the lending industry, usually involves younger people with little or no credit histories while poor credit relates to people that have established credit files with a negative history. Both types of buyers have difficulties getting auto loans but for two very different reasons.
In the case of no or thin credit files, auto finance companies are hesitant to grant a car loan because the borrower has no proven track record in regards to the use of credit. In other words, the lender has no history of payments on which to judge the credit worthiness of the borrower.
For people with a poor credit history, lenders are able to look at a person’s prior use of credit. Often times, bad credit is usually tied to an event such as job loss, illness or divorce and as long as the event that caused the problem is behind them, lenders may be willing to give the person a second chance.
People seeking an auto loan with no credit may be able to get better terms than those with bad credit if they can find someone to co-sign for them. For best results, a co-signer should have a positive credit rating with a high credit equal to or greater than the amount you’re currently looking to borrow.
If this is the case, you should have little problems getting approved. Unfortunately, a co-signer will not help people with a blemished credit history however, as mentioned previously, a lender may be willing to give you a second chance as long as the incident that caused the credit problem is behind them.
No credit auto loans can also be obtained without a co-signer if you have a large enough down payment and are looking at buying a car that is reasonably priced. This is true in the case of bad credit as well. In fact, considering the higher finance costs associated with both of these scenarios, it is ultimately more practical to stay well within your budget by purchasing an inexpensive and reliable car.
Bluesky Auto Finance specializes in helping people get car financing through its network of direct auto finance companies and auto dealers. Once you apply, you could get approved in minutes and be driving your new or used car as soon as tomorrow. Whether you have poor credit or no credit, we may be able to help.