April 19, 2022
Buying a new or used vehicle with no credit can be a challenge, but some auto lenders specialize in working with people who don’t have an established credit history. There are things you can do, like making a down payment or getting a co-signer, that could help improve your chances of being approved for an auto loan.
While it’s possible to buy a vehicle with no credit your financing options may be limited, and you may face challenges that consumers with a solid credit history may not experience.
Lenders generally prefer applicants who have an established pattern of responsible borrowing and making on-time payments. However, there are lenders that may be willing to work with you if you have little or no credit.
Most of us need a vehicle loan to purchase a vehicle. When you submit a loan application, lenders want to be reasonably sure you can repay it on time before determining whether to approve you for a loan. Your credit history is one of the many factors they review to determine your credit risk.
If you’ve never used credit before or haven’t used enough to establish a history of consistent, on-time payments, you may be considered a higher risk to lenders, and you’ll likely pay a higher interest rate which will mean higher monthly payments and more interest paid overall.
Since lenders typically run a credit check as part of their application process, it’s a good idea to review your credit reports on TransUnion, Equifax, and Experian, before you start shopping around for a new vehicle or financing options. You should do this even if you think there’s nothing on them. It will give you an opportunity to ensure the information is accurate and dispute anything that’s incorrect before you apply for a loan. It is common to have different credit scores across all three bureaus so to get the best loan terms you should bring all three credit scores to your loan appointment.
Shopping for a car loan with no credit may be challenging, but it’s not impossible. Here are options to consider.
Lenders that work with all credit profiles:
Special financing offers:
Finance through the dealership:
There are some things you can do that might help improve your chances of being approved for auto financing even if you have no credit.
Make a down payment:
Secure a consistent paycheck:
Get a co-signer:
Build your credit:
Take a thorough look at your situation and decide whether it is necessary to get a vehicle now or if you can wait until you’ve had a chance to build your credit history. If you don’t need a vehicle now, waiting to buy can be a great way to spend less in interest.
If it can’t wait, review your budget to determine how much vehicle you can afford, and stick to that number. Remember to shop around for loans.
Buying a vehicle can be an exciting venture. The good news is that you still can buy a vehicle without credit. It may take some extra steps, but a new vehicle is within reach.
We have a lot of additional education resources for your to check out before you buy a car. Including this great video detailing some additional information on why your credit score is important. If you have no credit or blemished credit our team at Dick Says Yes are professionals when it comes to getting you into a car you can afford and help you with a plan to help re-build your credit through your loan.