Can I buy a car with no credit?
The biggest factor in purchasing a new or used car is the price and payment method. You can either pay it all up front in cash or take out a loan. The only option if you don’t have enough money though is to get a loan or financing. But the downside is that you will need good credit to get a loan. Otherwise you will have a difficult time finding a dealership that will finance you if you have no credit or bad credit, and having no credit is the same as bad credit. But don’t let that stop you from enjoying the freedom of exploring and moving around, there are many available options to get and enjoy your first dream car.
What are my options for getting a no credit auto loan?
When you have bad credit or no credit, shopping for a new or used car will be more difficult than when you have fair credit or established credit. Thus, you should try to build or improve your credit score if you have the chance to. But don’t be discouraged, even without credit, it’s possible to obtain a used car loan. Read on to learn how to finance a used car with no credit history.
Look for a co-signer
You are more likely to get turned down in a bank or in the office of a lender if you get a loan on your own without a credit history. The situation will change, however, if you bring a co-signer. With a co-signer, you are practically using your co-signer’s credit history, making you appear to be more reliable. But if you decide not to pay back your loans, the lender will ask the co-signer to pay on your behalf.
So it is extremely important to be very careful if you choose to have a cosigner, since your actions will affect them too. They may have to make payments on your behalf if you fail to pay. And you will also permanently affect their credit score if you make a late payment or fail to make one at all. So make sure that if you decide to get a cosigner, you have the ability to make your car loan payments on time.
Look for buy here pay here (BHPH) used car dealerships
A used car dealership may offer programs for those without a credit history or with poor credit. These unique programs, also called in-house financing or buy here pay here (BHPH), can definitely help you get approved for a used car loan.
Buy here pay here (BHPH) used car dealerships simply act as a bank by financing the used car you purchased from them. Buy here pay here (BHPH) is perfect for people with no credit history or even bad credit scores. They’re different from traditional dealerships, which seek financing from prospective lenders and receive payments from third parties. Loan payments are made directly to the dealership, and interest rates can easily be negotiated with the used car dealership giving you a great amount of flexibility in terms of paying for your used car purchase.
Community banks and credit unions are another option
You may be able to get a loan from a credit union or a small community bank if the big banks refuse. Finding the right place is the key here. So look for lenders with first-time buyer programs. People with low credit scores tend to benefit from these programs. Because they will be looking past your credit score, they will consider other factors: how long you have been working, how much money you earn, how much you pay for utilities – and why you are currently without credit. Depending on what they find acceptable, you may be eligible for a loan and enjoy the freedom of owning your dream car.