Getting a car loan approved when you have no credit history can be almost as hard as getting one approved when you have bad credit. There are, however, things you can do to make it easier to get a car loan even if you have bad credit.
Ask your boss for a letter of recommendation. It should include how long you've worked there, how much you make now, and how much you make after taxes.
Make a payment history for yourself. This history should include a list of all the monthly bills you pay that are not reported to the credit agencies. Request a letter of recommendation from your landlord. Most utility companies will also give you a record of your payments. If you have small instalment accounts with local stores that don't report credit, you should also ask them for credit statements.
If you don't already have one, open a checking account. If your employer offers direct deposit, have your pay sent to your bank account.
Open a savings account where you already have a checking account. Set up a direct deposit from your paycheck to your savings account. Connect your savings account to your checking account to reduce the chance of going overdrawn.
Set aside more money for a down payment on your car while you are looking for the car you want and a lender.
Once you've done these things, you're ready to talk to a lender about getting a car loan with no credit.
You should start by asking the bank where you have your checking and savings accounts for a loan. Many banks and credit unions will work with customers who don't have credit histories as long as their accounts are in good standing and they have some kind of down payment. When you're looking for a car, look for dealers who let first-time buyers get credit. You should be careful around these dealers. Sometimes they'll make the prices of the cars too high or charge very high interest rates. Tell them you are looking at more than one lender and will compare their offers.
Let your payment be taken out of your checking account. This may help the lender overlook the fact that you don't have a credit history.
Learn as much as you can. Know the current interest rate for the person with the best credit. If you make enough money, have a down payment, and don't have any bad credit, your interest rate shouldn't be much higher than that. Choose a car that makes sense for your needs. You might not be able to get your dream car, but you can get a no-credit-check car loan for a lot of late-model cars with low mileage.
The most important thing to do after you get your auto loan is to make your payments on time. Don't take on too much debt, and don't keep having lenders check your credit rating. By following these simple rules, getting a car loan will be much easier the next time you need one.
