Obtaining a Car Loan with No Credit

If you are trying to get a no-credit car loan, you might have found that it can be extremely difficult. In most cases, the lender is going to want to see some type of credit history. If you do not have any credit, here are a few things to consider about getting a car loan.

Getting a Cosigner

One of the best ways to obtain a car loan with no credit is to get a cosigner. When you have a cosigner, the lender is going to assess the credit of the cosigner instead of your credit file. Therefore, you are essentially going to be leveraging your cosigner's credit so that you can get an auto loan. This is going to be a risky proposition for the cosigner because he or she will be responsible for the loan if you do not make the payments.  

Building Your Credit

Even though you currently do not have any credit history, that does not mean that you cannot develop some. If you want to get an auto loan, you need to make it your priority to build up your credit. This can be done in a number of different ways if you take the proper steps. 

Set up accounts--One of the first things that you need to do is set up a checking or savings account with a local bank. This is a very simple step that you can take in order to make a difference with your credit. You will simply have to go to a bank, fill out the appropriate paperwork to open an account and then fund the account. While a checking account is not directly reflected on your credit report, it can play a vital role in establishing credit for the first time. A creditor can gain valuable information by looking at your transaction history in your bank account. If you continually get overdrawn and bounce checks, this will not reflect positively on you. However, if you do a good job and take care of your checking account, the creditor will be more likely to offer you credit for the first time.

Credit cards--Another step that you can take to improve your chances of getting a car loan is to apply for a credit card. Credit cards are typically one of the first sources of credit extended to an individual. Once you are accepted, the credit card company will send you the card relatively quickly, and you can start making some small purchases with it. Once you have your credit card, you want to make sure that you do not go above your limit. You also want to make sure that you can pay off your balance at the end of each month. If you make a regular payment, the credit card company will report good things about you to the credit bureaus.

Consistency--You should also do your best to maintain a steady, responsible financial background. Stay in one place for an extended period. Creditors do not like to deal with people who move around every six months. They would much rather work with someone who stays in the same place and works for the same company for multiple years.

blog comments powered by Disqus