If you've never had credit in your name, it might be hard to get a loan for a new or used car. There are still ways to get around not having a credit history. Different kinds of people can get loans from different auto lenders. There is a lender who will work with you even if you have bad credit, no credit, or just had your car taken away. Here are some tips to help people who are buying their first car get a loan.
Apply for a gas card or a major credit card
If you want to buy a new or used car with a loan, it helps to have a credit history. So, lenders can get an idea of how likely it is that someone will use credit. Most finance companies are hesitant to give a loan to someone who wants to buy a car but has no credit history. Some lenders will work with people who have no credit history, but they will have to pay a higher interest rate.
Having at least one credit card can help you get an auto loan with a low rate. Auto financing companies prefer people who have had credit in the past. So, getting approved for a major credit card, gas card, or store card might help.
Pay your debts on time and keep your balances low for six months. When an auto financing company looks at your credit report, they will see that you have always paid your bills on time. This will give them confidence to give you a loan.
Use a No Credit Car Loan Lender
If you need a car loan but have no credit history, don't use dealership financing. Instead, look for a subprime auto loan lender in your area or online. Subprime lenders have a wide range of loans for people with different types of credit. So, people with bad credit histories can easily get approved. The interest rates on auto loans for people with no credit history are reasonable and, in most cases, lower than what the dealership offers.
Carefully use a co-signer
It takes time to build a good credit history. Use a co-signer if you need a car loan quickly and want a low interest rate. The loan agreement needs to be signed by co-signers. As the main person who bought the car, you have to make the loan payments. Keep in mind that if you can't pay back the loan, your co-signer will have to.
