If you have not yet established your credit but need a car loan, you will need to find a lender or auto dealer that offers zero credit loans. However, this is a term that most people are not familiar with. If you are not familiar with it, you may have many questions about it. Here are a few frequently asked questions about zero credit loans.
Is a Zero Credit Loan the Same as a Bad Credit Loan?
Many people confuse a zero credit loan and a bad credit loan. This is because lenders often look at the same information when approving or denying both of these types of loans. But technically, they are different types of loans. A zero credit loan is designed for those who don't yet have credit established, such as those who are 18 or who have never had a credit card. On the other hand, a bad credit loan is designed for someone who has established credit that is bad.
What Factors Are Looked at When Taking Out a Zero Credit Loan?
When you apply for a zero credit loan, the lender will primarily look at your job history and income. They will need to see how long you have been at your job and how much you earn. They will also ask you how much you pay in rent and other bills to determine whether you can pay the loan back. Since you don't have a credit history, your job history and income become extremely important. If you have not been on the job long, you may have problems qualifying for this type of loan.
Why Is Your Credit Still Checked When Taking Out a Zero Credit Loan?
If you are applying for a zero credit loan, the lender will still run your credit report. The primary reason for this is to ensure that you are being truthful about your past credit history. If they run the report, they will be able to see anything on your report. If you don't have a credit history, they can tell that by looking at the report. But if they did not run the report, those who may not be truthful can lie and say they don't have established history, when in reality, they have a poor credit history.
Getting answers to the questions you may have about zero credit loans will help you to better understand the loan process and feel more confident as you take out this type of loan.