Fixing Credit with No Credit Auto Loans

It usually takes more than just a credit card to reestablish auto credit

Consumers with past car credit problems may need to work with high-risk lenders in order to reestablish this type of credit.

Here at Auto Credit Express we know this rule generally holds true here because we’ve been helping car buyers with credit problems for more than two decades. Not only do we offer advice, but we can help locate dealers that can give these credit-challenged shoppers their best chance at approved auto loans.

Subprime auto loans

Visitors to our web site sometimes ask if they should even apply for car loans from a poor credit lender. Many in this group believe that paying cash for a car while qualifying for a regular or secured credit card can accomplish the same trick of improving their FICO scores.
But the reality is that doing this probably won’t correct their car credit problems, even if it raises their credit scores.

Revolving versus installment credit

The reason is that a credit card is a type of revolving credit. This means when just the minimum balance is paid, the lender allows the cardholder to carry over (revolve) the remaining balance into the following month.
Auto loans, in contrast, are considered installment credit. Taking out an installment loan dictates that you pay back loan amount, including interest, for a fixed payment every month during the loan term.
Another difference is that initial installment loan balances are typically higher than revolving credit limits. Installment loans also require higher monthly payments as a percentage of the balance and are also less flexible to changes. Installment buyers, therefore, must be more disciplined in paying back loans.

FICO scores

Credit scoring companies like FICO looks at both types of credit in assigning a credit score. Automotive lenders also consider both kinds of credit but
pay special attention to installment loans and, in particular, car loans. So while a good credit card payment record may help your credit scores, this doesn’t count nearly as much with auto lenders.
As a result, even applicants with decent credit scores are sometimes turned down for a car loan if they’ve never had one or if they had problems paying on a previous auto loan. As a result, most people in this situation may have to first prove themselves by establishing auto credit with a lender willing to take more of a risk.
So if this is the case or for whatever reason you’ve been turned down for a traditional car loan, since most of these lenders only loan indirectly, where do you find a dealer who works with them?

What we do

It’s time to take a deep breath.
Before you settle for a tote the note dealer, we want you to know that Auto Credit Express can help you find a dealer for your best chance at approved auto loans.
So if you’re ready to reestablish your auto credit, you can start here by filling out our online car loans application.