Financial institutions pay much attention to providing loans for individuals with perfect credit and bad credit, but they spend little time discussing lending options for people without established credit. When you first work to build your credit, no credit loans are your best options, as long as they report your good payment history to the major credit bureaus. Make sure you understand why different companies offer no credit loans so you can use their motivation to your advantage.
Student Credit
College campuses have no shortage of booths and advertisements for student credit cards and loans. While many students don’t manage their credit and end up in debt, you can use these no credit loans for students to establish a good credit history. The key to avoiding the student debt trap is applying for only one card and never using it for shopping splurges.
Lenders that offer student credit cards want more than the interest you pay each month on purchases. They want a solid relationship with you as you progress through various life stages. Knowing this, only apply for a credit card with a financial institution that offers loans you need in the future, like auto loans and mortgages. You may also find additional benefits for banking and investing with the same company who issued the card, so make sure you have plenty of local branch offices nearby.
Used Car Lots
Although the major car dealerships require some level of credit history to finance a vehicle, the smaller car lots offer no credit loans on a regular basis. In some cases, your car salesperson is also your lender. Used car lots provide these loans because vehicles are more difficult to finance once they reach a certain age. The cost paid by your dealer for each automobile at auction is often far less than you pay, so the dealer might own each car on the lot outright. This makes every sale they make coupled with the financing charge pure profit.
The dealership can afford to make no credit loans to purchase their cars because they require you make more frequent payments, sometimes every week. Having collateral and steady cash flow lessens their risk and allows them to take a chance on individuals establishing credit. Don’t forget that you can negotiate monthly payments if a weekly schedule doesn’t work well with your current budget.
No credit loans come in multiple forms and allow you to build your credit from scratch. As with any loan product, always read every word of the contract to make sure you get everything promised by the lender.
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