Having your own car can make all the difference in your daily life. The convenience and independence of having a car can make it much easier to get around and accomplish your daily tasks. However, if you don’t have any credit or enough credit, it might seem like obtaining a car loan is an insurmountable obstacle.
When you’re in the market for a new car, not having credit can be tricky, but it’s not impossible. Don’t worry. There are ways to obtain a car loan, even if you don’t have a credit score. Here’s how!
Income is key
In order to obtain a car loan without any credit, you’ll need to have income that can stand as collateral. The required amount will depend on the type of loan you’re looking for. The more attractive your collateral (which in this case is your income), the better deal you’ll be able to get on your desired car.
It’s important to make yourself as attractive a borrower as possible by putting together an impressive financial profile. Create a spreadsheet or table, and list all of your sources of monthly income. Include any part-time jobs and other sources of regular cash inflow. This should be used in addition to documentation from employers, if available. Also, include any documentation of your assets and liabilities. This will help to present an accurate picture of your net worth.
Check your credit
Before you start shopping around for a car loan, be sure to check your credit. Your credit score will affect the types of loans for which you’ll be eligible and, by extension, the interest rate you’ll have to pay. Credit factors include payment history, delinquencies, bankruptcy payments, and collections, if applicable. The more marks like these that appear on your credit report, the more significantly your final interest rate will be impacted. Even if you don’t have a score because you’ve never had credit, it’s possible to obtain a free credit reading from certain sites like Lending Tree and AnnualCreditReport.com.
Obtaining credit for the first time can be a little tricky because you have to establish a credit history. However, this does not mean you need to get credit because this isn’t always the case. The way in which you manage the credit you already have is considered when lenders determine how much money they will lend to you. Therefore, if you have a bank account and a job, it should be easier for you to obtain a car loan with no credit because these two factors are considered good financial indicators.
Boost your credit score
It’s important to build up some kind of positive credit history in order to increase your chances of being approved for a car loan. How can you do this? Items like credit card accounts, installment loans, and other lines of credit are factors that typically go into the calculation used to determine a person’s credit score. You don’t need to start using these types of accounts until after you’ve been approved for a new car loan, it is very helpful to have them open when it comes time to apply. How do you open these kinds of accounts? You can visit websites like NerdWallet for lists of places to obtain credit cards, installment loans, and other lines of credit for people with no or bad credit.
Look for “Buy Here, Pay Here” dealerships
Obtaining a car loan with no credit will require you to find a dealer that will work with people in that type of situation. Start looking around your local area, and search for “Buy Here, Pay Here” car lots, like Carfect. These types of places specialize in providing customers with zero or bad credit auto loans. However, be careful about making a deal too quickly. It’s a good idea to review your dealer’s record first before applying.
Don’t hesitate to negotiate
Start by visiting a car dealership and filling out an application for a car loan with no credit. After you fill out the paperwork, sit down with a representative and negotiate the price of the vehicle you want to buy. Be sure to do your research and come in prepared with your best offer. It’s best to bring in your documents, showing you can make payments on time.
Obtaining a car loan with no credit can be more challenging than with good credit. If you follow these tips and prepare yourself for the application process before taking your first step, you will be on your way to owning your very first car before you know it!
If you’re looking for a reliable second-hand car to drive home, Carfect is the best place to shop. At Carfect, we make it easy to finance your vehicle. Our customer service team is ready to answer all of your questions and can set up an appointment for you today