7 Tips for Financing a Used Car with No Credit

financing used car with no credit

Entering the credit world can be an exciting part of life, particularly if you make significant purchases. But if you plan to buy a car without a solid credit record, you’re likely to have a hard time. Having a good credit history alone is not always enough to convince prospective lenders. In this post, we will look at tips for financing a used car with no credit.

Make sure you have money for your down payment

When financing a used car, it’s essential that you have sufficient funds on hand in order to put down at least 20% of the sales price. Many used car dealers will not allow buyers with no credit history to bring their own financing or trade-in vehicle. Moreover, you need to factor in additional expenses like insurance and taxes. You don’t want to find yourself broke after making your purchase.

Have a co-signer

When it comes to financing a car without no credit, your best bet is to find someone with a solid credit history to co-sign your loan documents. A co-signer will have to agree to bear any financial responsibility resulting from missed payments, but this person will agree to co-sign at a lower interest rate.

Obtain a no-credit loan

In some cases, it’s possible to obtain a car loan with no credit by applying for a special loan. There are available loans that don’t require evidence of your credit standing or payment history. You can work with dealers who offer such loans, or you can check with your local bank to see if they offer this type of loan.

Prepare your budget for higher fees

Financing a used car purchase with no credit will definitely cost you more when it comes to your interest rates and down payment. Be prepared for this reality that comes with buying a used car with no credit history.

In this case, the best thing to do is to allow for adequate wiggle room in your budget so you can manage your costs. You can use a finance calculator to help determine how much your monthly vehicle payments will be.

Make your payments on-time

Even if you don’t have any credit history, this does not mean that lenders will give you a pass on missed or late payments. That’s why it’s so important to remain aware of your payment schedule, and make sure you can manage any added expenses. Timeliness is everything when it comes to a car loan.

The first offer you receive is not always the best offer

Even without a credit record, you are still likely to have options. Therefore, don’t simply accept the first offer you get. Take time to look around for the best offers. Then read all documents carefully before you seal the deal. Remember that a lot of dealerships provide different kinds of financing. Shop around so you have increased chances of financing a used car with no credit.

Sign up for credit

If you’ve never had a credit card or taken out a loan before, then you will have to start somewhere. You can sign up for a secured credit card that reports to the major credit bureaus, and use it regularly. If your payment history is good, this may be all you need to establish a decent score on your credit report.

Remember that credit history is a privilege, not a right

The absence of bad credit does not mean you automatically have a green light to apply for loans recklessly and miss payments. Financing a used car with no credit is great, but it doesn’t give you the liberty to commit mistakes when it comes to managing your accounts.


Although financing a used car without a credit history can be difficult, it doesn’t mean that it is impossible. You have to keep trying until you find the right one for you.

These tips for financing a used car with no credit can be your starting point in order to learn more about the options available to you. Remember, it’s crucial that you find out as much information as possible before making any decisions. Talk to your dealer and speak with a bank representative if necessary.

Financing a used car with no credit has never been easier with Carfect. Our team is ready to provide you with answers on your next vehicle purchase. Call us today for more information!


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