If you don’t have a credit history, you might think that you can’t get a car loan. This isn’t necessarily true. If you lack a lack a credit history or have no credit, there are still a number of options available to you when purchasing a vehicle.
First, you can make yourself a better candidate by opening a checking and savings account which can show a lender that you are responsible with money when you maintain a balance. You can apply for a credit card which reports to a credit bureau. If you use the card and pay it off monthly this can show a lender that you are able to manage credit and will also begin your credit history. You can keep a steady employment and residence. If you move around a lot, lenders are likely to think that you are not stable.
There are several ways that you can get a car loan without credit, but you should be wary because there are some lenders who prey on those who have no credit or bad credit. The terms of these loans can make them very difficult to repay with high interest rates.
One kind of loan is called a car title loan. There is no credit check performed with this kind of loan but it requires that you use another vehicle as collateral for the new loan. What this means is that if you do not repay your loan, then you may lose both cars through repossession.
Another option for those with no credit is to have someone with good credit cosign. This means that if you are not able to repay then the cosigner will have to pay off the loan for you.
It’s a good idea to talk with lenders and try and get preapproved before you go car shopping. It’s also a good idea to choose something that is modest. It may be more difficult to get a loan on a car that is on the expensive end. Focus on vehicles that you can afford more than your dream car.