Having a good credit score has its share of advantages when you apply for a car loan. However, a lender's approval can seem to be a little bit daunting when you have a no credit history i.e. zero credit score because you have never applied for a loan or a credit card before. But the good news is that one can still avail a car loan despite no credit history or a low credit score. Here are the measures that you should implement to get a car loan without a credit score.
Prove your income can support EMI payments
Most of the banks consider other factors such as your current salary or income sources along with your credit score. If you do not have a credit score, you can still get a car loan by providing your latest bank statements which reflects details such as increment in your salary, annual bonus, or other additional income sources. This will prove that you are financially sound and can repay your loan on time. This will help you get approval faster.
Present records of repayments of your existing bills
Your credit score depends on the timely repayment of your existing debts. So, if you want to avail of a car loan despite having no previous credit history, you can show records of timely payments on all your outstanding debts like your credit cards, loan EMIs, and utility bills. This will help you build a higher credit score and improve your chances of being loan approved.
Apply for a loan from an NBFC
If you have no credit score, you can easily secure a car loan from an NBFC as they tend to have more relaxed policies towards customers with low or no credit scores when compared to traditional lenders. However, an important thing to note here is that the interest rate charged by NBFCs is higher than what is offered by banks. So, make a smart move after considering all the other important aspects.
Opt for a low car loan amount
The lender may view you as a risky customer if you are borrowing a huge sum of money with no credit score. You can opt for a lower amount and repay it regularly, to build a higher credit score. This will earn the lender’s trust in your creditworthiness and then you can go back for a loan of a higher amount. Also, repayment of a lower amount will be easier on your pocket without affecting your present finances.
Get a guarantor or apply for a joint loan
Even if you are new to credit or when you have zero credit history, you can still get fast approval on your car loan with a co-applicant or a guarantor. Make sure that the guarantor with whom you are applying for a loan must have a good credit history and a high credit score. This will incline the lender to help you get the better deal.
Apply for a secured loan
Another easy way to get a car loan is to apply against some collateral to secure the loan repayment. A collateral could be anything such as your gold jewelry, private property, fixed deposits, or other valuable assets.
Build your credit score
If you do not need a vehicle now, you can wait and take some time to establish a solid credit history. Focusing on building your credit score can help to lower potential interest rates and save you money in the long run.