What You Need to Know about No Credit Car Loans

April 19th, 2019 by

A computer screen is shown with a no credit form on it.

More than half the population of Indianapolis consists of adults between the ages of 18 and 65 years old, according to data from the U.S. Census Bureau, and a lot of those people are young adults just getting started. That means there are a lot of people throughout Indianapolis who have either very little or no credit built up, while still in need of things like car loans and mortgages. That is why low or no credit car loans in Indianapolis are so valuable and important.

Having good credit is not just something that happens—it takes work and it has to be not only built up but also maintained. A no credit car loan is a great way to build and maintain good credit in Indianapolis or anywhere else. These loans are designed for people who do not have much of a credit history – so unlike a lot of other car loans, they are often easier to qualify for. Not all dealerships offer these kinds of loans, however, so it is important to understand where you need to look and what you want to find.

It’s also important to remember that no credit car loans for people in Indianapolis are not without their drawbacks. They usually have higher interest rates than those available to people with great credit scores, and they can limit your options when it comes to buying a car. But if you’re just getting started with building your credit, or rebuilding it, then they are a great option.

What is a No Credit Car Loan?

A no credit car loan in Indianapolis or anywhere else is a loan that is designed for people who do not have much in the way of an established credit history. A lot of us in Indianapolis are young or just getting started with building credit. There are lots of reasons why you might not have much of a credit history—while being young is one of the biggest ones, it’s also possible that you simply paid for things with cash in the past or perhaps you are in the process of rebuilding your credit.

Whatever the reason, a no credit car loan in Indianapolis gives you the opportunity to start building your credit up. If you don’t have much in the way of credit and you’ve tried to go to other dealerships, then you might have already experienced the frustration of being denied the possibility of buying a car. A no credit car loan lets people, who are trying to get their start, in on the ground floor to building good credit.

Where Can I Get a Loan?

You can typically apply for a no credit car loan at a dealership in Indianapolis or the surrounding area, though you might be able to use the internet as well. It’s the 21st Century, after all, so buying a car doesn’t have to be like it was forty years ago. You can still go to a traditional dealership if you want to—just look for ones that advertise financing for people with little or poor credit, often a Buy Here/Pay Here dealership.

Online car dealerships also offer a great way to find a no credit car loan and get started building good credit. These websites can operate in different ways, but it will usually let you browse the inventory at your leisure, select a vehicle you are interested in, and have it brought to you so you can check it out and go for a test drive. These sites have all their financing tools available online so you can see what kind of loan you can receive and get a sense of your options.

How Does a No Credit Car Loan Help Me?

A happy woman is holding the keys to her new car. She used no credit car loans in Indianapolis to buy it.

The biggest benefit of a no credit car loan in Indianapolis or anywhere else is that it lets you start building up positive credit—and makes it so you can get a vehicle. Since there are so many young people living in Indianapolis, it is a great place to get your start, but that can be difficult if you haven’t already built up some good credit. A no credit car loan is designed for you to be able to qualify even if you do not have credit, making it an ideal choice.

By making your payments on the loan on time, you start building good credit. It’s very important to remember the “on time” part, however, as late payments can negatively impact your credit score. But consistent, on-time payments help improve your credit and make future loans and financing even easier. Plus, if you are trying to buy a car with just the cash you have, then your options are probably a lot more limited than if you also consider a loan.

Are There Drawbacks to These Loans?

Yes, there is one particularly important drawback to a no credit car loan: the interest rate. On a loan, the interest rate is the amount of extra money you pay over the course of the loan as a way to compensate the lender. For example, if you borrow $100 and it has 10% interest on it, then you pay back $110—the original $100 of the loaned amount, plus $10 as interest. The higher the interest rate, the more interest you pay over the lifetime of the loan.

No credit car loans often have pretty high-interest rates, especially when compared to loans for people with excellent credit. This can seem unfair, but it ultimately serves as compensation for lenders who are willing to take a chance by lending money to someone without an established credit history. For lenders, this can be seen as a pretty major risk, so they require more interest to ensure they are protected if the risk ends up hurting them.

Just remember: by receiving a low or no credit car loan, you are building good credit for yourself. It can be tough to deal with high-interest rates for a few years as you pay back a loan, but the next time you want to buy a vehicle, your credit will be established and you should be able to get a loan with a lower rate. This is especially true if you make your payments on time and use other methods to build good credit, such as responsible use of credit cards and other loans you can pay off on-time.

The Last Word

Indianapolis is a great place to live, work, and build a life for yourself—whether that means buying a house and having kids, or going on vacation for a few weeks every year. Most of us here in Indianapolis have to work, and the average commute time is about 23 minutes—so having a car is very important. That’s what makes a no credit car loan in Indianapolis so valuable since it gives you a chance to not only have the car you need but also start building up good credit.

Just remember to look for financing that works for you and fits into your lifestyle. Don’t get a huge loan that you cannot possibly pay back or that will stretch you too thin every month when you have to make payments. Building up credit is about making responsible choices—you can still have fun and spend money on luxury items, just make sure you are covering your expenses first.