Best Lenders for First-Time Buyers | Ohio No Credit Loans
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How to Get an Auto Loan with No Credit
Many wonder "if you need credit to get a loan, how do you get your first loan?" Over 26 million American adults have no credit history. Applying for an auto loan with limited or no credit in Ohio can seem challenging, but options are available for first-time buyers. Online and special finance lenders in Ohio specialize in working with limited credit applicants. Consumers with bad or no credit history can find these special finance loans online. Compare rates from top lenders and don't let a low credit score stop you from getting the right car at the right payment.
How Do I Know If I Have a Credit Score?
In the world of finance, credit score is king. It represents your buying power, how appealing you are to banks, and is the sum of all your past credit history on record. Your credit score is a numerical rating usually between 400-800. The number is based on the reports on your credit history such as payments (late and on time), debts, and past charge-offs.
The first step to any large financial decision is understanding your credit score and history. Going into the dealer blind can leave you at a disadvantage in negotiations and harm your score through multiple “pulls” by lenders, Everyone is entitled to a free credit history report once a year from each of the major reporting bureaus (Trans Union, Experian, Equifax).
Should I Buy New or Used?
When looking for your first or no credit auto loan, most people jump at the idea of a car fresh of the line with that new car smell, but it isn’t always the best decision financially. While people who purchase new cars can enjoy lower interest rates and special incentives there is a reason it is recommended to avoid new cars in most situations. The problem with new vehicles is depreciation, once a car gets its first owner it will see a large drop in value, and depending on the amount put down or vehicle traded in this can give you negative equity in your loan. However. For the right terms and price, a new car can be a good option, especially if you plan on keeping it for a very long time.
Used and certified pre-owned vehicles may have some wear, no warranty, and often come with higher interest rates but they will have a much better chance of retaining their value when being sold to a second or third owner than it would when going from new to pre-owned. Most financial advisors would recommend finding a used vehicle with low miles rather than a brand-new vehicle.
Planning for the Cost of a Car Loan
Before looking for a no credit auto loan, it's vital to establish a clear budget for your vehicle purchase. This budget should incorporate not only the vehicle's cost but also registration fees, insurance, initial taxes, fuel, and maintenance expenses. Knowing your budget can help you avoid financial mistakes and buyer’s remorse.
When purchasing a vehicle, budgeting is crucial. If you do not plan ahead you can end up with a high payment which could result in you defaulting on the loan and damaging your credit. Nerdwallet recommends spending less than 10% of your monthly income on a car payment and less than 20% overall on vehicle expenses (gas, insurance, maintenance.). For example, if you make $2500 per month you should aim for a payment of $250/mo or less. The average car payment in Ohio is $335 for used vehicles and $535 for new vehicles.
It is recommended you compile your monthly income and expenses before planning your budget. Use our Free Auto Loan Calculator to estimate your payments based on term, interest, and money down.
The monthly and upfront cost of your vehicle may be the most pressing factors but they are not all the matters. The cost of your vehicle is also determined by the length of the loan term. The longer the loan is financed the more money you will pay in interest. Auto loans usually range from 36 to 72 months with the most common term being 60 months (5 years). $10,000 financed for 5 years should come to a payment of about $200.