To most lenders, a lack of credit history is not much better than having bad credit. If you don’t have an established credit history, you may find it challenging to get a car loan. Lenders like to see that you have a pattern of making your payments on time – but if you haven’t had any credit previously, lenders can’t make a prediction whether you will repay the loan or not. Here are some tips from Cross Keys Auto, a St. Louis used car dealer, for buying a car without an established credit history:

Start Establishing Credit
The best thing you can do when you want to buy a used car with a lack of credit history is to start establishing credit! Apply for a no-annual fee credit card. If you are unable to get a traditional credit card to start with, consider a secured card. Make a few small purchases each month and pay the balance in full before the due date. This is a quick and easy way to establish a credit history.

Check Your Own Credit
You can pull your own credit history any time with no ill effects to your credit score. Before applying for a used car loan, you should pull your credit history with a credit score. If your score is not over 550, you should take some time to build a credit history and score before applying for car loans. In the meantime, start saving money toward your car down payment.

“Any car will be better than the junk I’m currently driving!” Sometimes people come in to buy a used car from us and they’re so fed up with the car they’ve been driving around in they’re certain ANY car on our lot will be better than what they already have. While this may be true, it doesn’t mean that a better performing car is the only criteria to choosing a car that fits your needs.

“I always buy the same kind of car, I know how it drives.” Even if you always buy a used Nissan or a used Chevrolet, simply buying the same type of car in a newer year doesn’t mean you’re getting the same features as you’ve had previously. A 1990 Ford is not the same as a 2000 Ford, even if you stay in the same model family. Drive any car you are considering driving, and then drive another car or two so you have something to compare it to.

Test Driving Tips

When you are looking for a used car to buy, get in and make sure it’s comfortable behind the wheel. Is there room for your legs? Can a passenger ride in the backseat comfortably when you are behind the wheel? Listen for any problems and pay attention to how the car handles when you drive it around St. Louis for a test drive. Compare any car you are interested in to another car or two to make sure you’re making the right choice.

If you’re looking for a dealer in St. Louis that offers Guaranteed Car Financing, you’re probably at least suspicious that your credit isn’t perfect. You might have looked into other options, like bad credit financing. These options are similar, but there are important differences between them.

In a bad credit car loan, the money for you to buy the car is usually lent by a service that focuses on lending. These are third party businesses that work closely with car dealers to provide loans. That means if a person defaults on a loan (i.e. fails to pay the loan), the company that offered the loan takes the loss.

With guaranteed auto financing, it’s usually the dealer itself who takes the responsibility for the loan. The money for you to purchase the car comes directly from the dealer, so if you default, the dealer takes the loss.

Often, making payments on a guaranteed car financing loan involves going to the dealer and presenting payments in person. And these payments can have different terms, maybe requiring you to go to the dealer every week to make a payment.

Often a dealer who offers guaranteed credit financing doesn’t do a credit check, so if you don’t have great credit it won’t be a problem.

The downside is that many dealers who offer guaranteed car financing don’t report your payments to the bureaus. So while you may get a vehicle, and it may not require showing a credit report, all those payments you’re making won’t be doing anything to bring your credit back up. So the next time you need a car, you may need to work out a similar deal.

Buying a used car in St. Louis? With millions of Americans getting used car loans every year to buy a car, the chances are good you may be considering a used car loan, too.

When you apply, you’ll be graded on your credit score, otherwise known as your FICO score. But just what the heck is that, anyway?

The name comes from the software that is used to come up with credit scores, which was developed by Fair Isaac Company, FICO.

Depending on who you get your report from, you may hear your FICO scored referred to by different names. Experian sticks close to home, and calls the score your Experian score or your Fair Isaac Risk Model score. Equifax puts a fancy branding spin on it, calling it the BEACON® Score. TransUnion takes a similar approach. They call the FICO the EMPIRICA® Score. At their core, these are all the same thing.

Of course, there’s a difference in reporting formulas, so each of these scores will actually be a little different.

It’s important to realize that a car loan doesn’t always stop at the FICO score. Each lender has the final choice to lend to a person or not. And depending on the kind of loan you’re applying for, they may take other factors into comparison to see if you’re a risk worth investing in.

Check your own credit score before looking for a vehicle. The person who’s prepared for the conversation is usually the one that comes out on the winning side.

Lots of people are qualified for Guaranteed Car Financing. The onus of things you need to prove to get guaranteed auto financing is much lower than what you need to show to get a regular car loan. For guaranteed car financing, most lenders are looking for you to meet a few minimum requirements that most people in America can meet. They’ll want to see things like signs of steady employment. You can bring in pay stubs that cover a period of time, or show tax documents from the same employer for a couple of years.

Most of the people who benefit from guaranteed auto financing are people like students, who may be too young to have developed a credit history, but are driven enough to be employed as they work their way through school.

Other people who may benefit from guaranteed car financing are recently naturalized American citizens. If you’ve moved to the United States from another country where the credit infrastructure is not as well established, you may not be trailing a credit history. Similarly, people who have managed to go most of their lives without using much credit can benefit from guaranteed auto financing.

It is important to note that just because a lender offers Guaranteed car financing, that doesn’t mean it’s guaranteed to anyone who walks in. Even guaranteed car financing has it’s requirements.

Thinking about buying a used car in St. Louis (instead of a new one)? There are a lot of good reasons to go used. For instance – did you know that a new car loses the biggest piece of it’s value the second you buy it?  As soon as you drive that shiny new car off the lot, it’s no longer considered “new”, and so it’s no longer worth as much.

Some people just can’t get over the new car thing. They’re new car people, and the idea of buying used just doesn’t feel right.

At Cross Keys, we think buying used makes a lot of sense. And people seem to agree with us. There are more used cars sold in America each year than new. Quite a bit more, too.

Besides the money aspect, a big reason to buy used is that you have a wider array of choices to fit your budget. With a new car of a certain model, you’ll pay somewhere between what the manufacturer thinks you should pay, and what the dealer paid for it. When you buy a used version of the same model, you’re in a different negotiation. You may be able to find something that’s carrying a few more miles on the odometer, but will save you a good chunk of change.

You’re also not limited to the latest versions of cars. If you’re interested in a Honda Civic, you get to choose between more recent models that may be newer and have fewer miles, or go back a few more years in the line and find something less expensive.