When you head to college, you will need a car to make it easy to commute from your accommodation to campus. Depending on your budget, starting with a used car would be great. Used cars are a preferred option since they are cheaper, and with low income, you can get a decent quality vehicle. Also, many credit options will allow you to purchase the car in installments. At the same time, you may be required to present a credit history that could determine your eligibility for a car loan.
Types of Credit History
There are three credit history types that you can use to help determine whether you could buy a used car for college. They are Experian, TransUnion, and Auto Credit. Before you get on the same path of presenting one of these credit history reports, it is best if you are familiar with them.
Experian Credit History
The Experian report contains information about your activities and your financial situation. The banks and lenders will use this report to determine whether you can afford a loan and whether your income is enough for installment payments. You may be required to pay a fee for this credit history report. It is best to request a copy from the individual who created the report to ensure that the details are correct.
Experian Credit Score
The Experian credit history is a score that is calculated after you have applied for the quickest loan you can get. The score will be based on your payment history, length of employment, and credit rate. The score determines if you are qualified for a car loan or not. A lower number means that it will be hard for you to get a loan, but it is still possible.
Benefits of Experian Credit Information Report
- It helps you make informed financial decisions
- It provides you with a score used to determine your credit score
- It helps you get a loan if you need one
- You could get a copy of the report at zero charges
TransUnion Credit History
TransUnion has a credit history report that contains information about your credit history and your financial situation. The report will tell the lender what type of loans you have taken and whether you can afford to pay off the loan. A lower number in this report means a larger responsibility of repaying the loan. If you have a bad score, this could mean that you will be denied a loan and other financing options.
TransUnion Credit Score
The TransUnion credit history score is a number that is used to determine if you are eligible for loans and car financing. The score is based on your bank account balances and payment history. As the number increases, it indicates a better chance of approval for loans and car financing.
The Auto Credit Score
If you have yet to apply for any financing, it would be great to request an auto credit history report so that your lender can determine your credit score and your financial situation. The report will reveal your payment history, the length of time that you have had a bank account, and your credit score.
Benefits of Auto Credit Information Report
- It helps you get financed for vehicles as well as other products
- This gives you bank statements showing all payments and balances
- It shows how often you have used your credit card or loans
Automated Underwriting System (AUS) Score
The Automated Underwriting System used by many banks and lenders will use the information in your credit history to do an automated assessment of your credit history. The report also contains information about the non-payment of previous loans. The lender will then compute an assessment score to be used once you have applied for a loan.
Many students and young adults may find it difficult to get a car loan simply because of their credit histories. They may not have had any credit in the past, or they might have a low score, which indicates that they are not good at paying off loans. That is why it is important to ensure that you have taken the time to investigate your options of getting a used car when you start college.
Can You Get a Car Loan Without a Credit History?
If you do not have a credit history, it is still possible to get credit. You may have to consider some of the following options, co-sign, startup payment plan, certified check, no credit loan history.
a) Co-sign
You can get someone to co-sign your loan if your lender is uncomfortable with your financial history and the amount you want to borrow. The co-signer will be liable for the debt but will be able to enjoy the benefits of buying a used car with a low-down payment.
b) Start-Up Payment Plan
Some lenders might allow you to pay only a portion of the loan every month, and they will provide an additional loan to help you pay off the balance faster. This approach would allow you to take advantage of lease options instead of purchasing a vehicle outright.
c) Certified Check
A certified check guarantees that you will pay off the loan and keep it in good standing. Lenders do not trust this type of certification unless they know that you have had no problems with paying off loans before.
d) No Credit History Loan
A lender may allow you to purchase a vehicle without checking your credit score. Assuming the amount you want to borrow is not too high, this loan could also be based on the lender’s different requirements.
Can You Get a Car Loan With Poor Credit?
If you have a poor credit history, getting a car loan through conventional routes won’t be easy. However, you may still be able to get financing if you have other options. There is more than one type of no-credit loan available to students and young adults. You can check with your lender for more information about them to find what will work best for you.
Tips for Understanding Your Credit History Report
- When you request your credit history report to determine what type of car loan you can get, make sure to ask for the report in writing. It would be best if you had this to confirm that the report you get is accurate and complete.
- The information on the credit report will be available from each of the three credit bureaus: Equifax, Experian, and TransUnion. It will allow you to compare your report with those of other agencies.
- You should always ask for information that may not be part of your credit report. Such information might include other loans like insurance and personal loans. These are usually not included in the credit history report, but you should still find out if you have any of them.
- Obtain a free copy from each agency to compare their information on your credit history monthly to track how it is changing.
Final Thoughts
The credit reports that you can get from the agencies are usually based on your previous banking and lending activities. They will show if you have ever defaulted on a loan or had accounts that are delinquent in their payments. It is also possible to check your credit scores from different financial institutions to ensure that the information is correct.
If you understand the types of credit history, you can decide on one that fits you in your application for a car loan.
