How To Buy A Car With No Credit
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Most car purchases feature your credit history as a major factor that helps decide your interest rate, loan acceptance, and whether or not you can even buy the car. However, this isn’t much help when you don’t have a credit history. While this does complicate things a little bit and changes how you’ll go about buying a car, it doesn’t mean it’s impossible. This can be tricky to navigate, but CoPilot is here with you every step of the way to show you how to buy a car with no credit and get you on the road!
How Credit Is Used in Car Purchases
Loan lenders like to look at loan applicants’ credit history so that they can evaluate the financial situation of their applicants. Essentially, they want to look at the purchases that person has made over the years and how good they are about paying them back on time.
For this reason, lenders can get worried when they see that you have no credit history. They might think you’re more likely than other applicants to fail to pay back your loan on time, making them less willing to accept you for an auto loan. Don’t lose hope if you’re looking for how to buy a car with no credit, though! You still have options available to you to finance your new car purchase, which we’ll get into below.
FEEL SECURE IN THE CAR YOU CHOOSE
You don’t want to buy a car - you want to get the best deal on the car you’re looking for. The CoPilot app will notify you if there’s a similar vehicle in your area at a better price, so you’re always certain you got the best deal available.
Where to Go to Buy a Car with No Credit
You might be surprised to learn that there are actually several places you can go that will help you out with getting an auto loan even without credit. You’ll probably have to pay higher interest rates, but the following sources are worth looking into:
- Financing from the dealers themselves. Certain dealerships are keen to sell their cars to people with no credit or bad credit history, and you might even be able to get a name-brand car you really want. Call up the dealership you want to shop from and see what options they have for you. Make sure to avoid red flags, though, as some might have vague stipulations in their contract (like no stated interest rate) that come back to haunt you later on.
- Specialized lenders. Some lenders focus on giving loans to people with little to no credit, so these could be a great option. If you have some kind of income statement proving that you have a steady income, this would be very helpful here.
- Community banks and credit unions. These institutions often offer programs designed to help people who don’t have credit, and some of these programs even allow you to build credit while you’re financing your car. You usually have to already be a member, though, so do some research and start working on becoming a member right away if this option interests you. If it’s your first time buying a car, some community banks and credit unions have programs specialized for that as well. Don’t be afraid to call these places and explain your situation personally, as many would likely love to help.
- Unique financing programs. Depending on the exact nature of your situation, you may be able to receive additional help in financing. According to CreditKarma, there are a variety of programs available to help students or recent graduates looking for a car, for example. Keep on the lookout for any special programs that might apply to you.
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Tips for Getting the Best Deal with No Credit
Although you may have a more difficult time buying your car without credit history, you can definitely make it easier on yourself. It’s worth being said that none of the following information applies if you have the money on hand to simply purchase the vehicle outright; your lack of credit history shouldn’t matter at all if you can just pay for the car.
If you do require a loan, however, let’s get into how to buy a car with no credit and maximize your savings at the same time. Here are some of the best practices for getting the most bang for your buck:
- Use a co-signer. Having a co-signer on the loan application with you is absolutely one of the best ways to increase your chances of getting an approval. They’re agreeing to pay off the loan if you’re unable to so that the lender still gets their payday, making the lender a lot more comfortable with giving money to someone without credit. Of course, this can present a risk to your co-signer, so it’s important to make sure you trust them and that they trust you.
- Get a reliable source of income. Even without credit history, being able to show the lender that you have a steady paycheck will do you a huge service in getting your loan approved. It’s highly unlikely that you will be approved for a loan if the lender thinks you have no source of income and, thus, no way to pay the loan back.
THE BEST USED LUXURY CARS ON THE MARKET
Buying a used or CPO luxury car is one of the smartest buys you can make - you can get a lot of car for not much money. You can pick up a three-year-old luxury car for about half of what you’d pay new. Check out this list of the best used luxury cars on the market to find the best deals.
- Make a reasonable down payment first. It doesn’t have to be huge, but making some kind of down payment on the car right away will help you in multiple ways. Many lenders require one anyway, but it also shows that you’re willing to start paying right away, and it actually makes the loan cheaper for you overall. It lowers the principal cost of the car, so you’re borrowing less and paying interest on a smaller amount.
- Explore your options. As we’ve stated above, there are several places you can get loans from without credit. It’s best to look around and see what you’re eligible for and how much you’ll owe to different lenders so that you can get the most reasonable deal.
- Start building credit. This may sound like silly advice when you’re trying to find out how to buy a car with no credit, but we can’t go without mentioning it. Having a great credit score really will provide you with many benefits in buying a car, and if you’re willing to wait a bit longer to buy a car in order to build up your credit, you might find that it’s worth it.
Get a Curated List of the Best Used Cars Near You
The CoPilot car shopping app is the easiest way to buy a car. Tell us what you’re looking for and we’ll search the inventories of every dealership in your area to make you a personalized list of the best car listings in your area.
Only looking for newer models? CoPilot Compare is the search engine for nearly-new cars. Only see cars five years or newer with low mileage — CoPilot Compare is the best way to find off-lease, early trade-in, and CPO cars.
The best part? CoPilot is built using the same technology that dealerships use to buy and sell their inventories, so we have more info on each vehicle than competitors. CoPilot doesn’t work with dealerships, so there are no sponsored posts or other shady practices — just the most info on the best cars. Check out our About Us page to see how CoPilot works.
