Now that you’re an adult, you may find that you need a car to get to work or classes. If you’ve never applied for credit, getting approved for an auto loan can be a challenge, although there are ways to get one with no credit history.
Preparing for the Loan You Need
You won’t be able to walk into a dealership, get a loan, and drive off in your car if you have little to no credit history. What you’ll need to do is a little research and planning:
- Double check your credit – Even if you’re sure you have no credit history, you should still double check. Auto lenders generally use your FICO credit score to determine loan eligibility. You’re also entitled to a free copy of your credit reports from each of the three major credit bureaus – TransUnion, Equifax, and Experian – every 12 months. If, for instance, you’ve been an authorized user on a credit card in the past, this will appear on your credit reports and, after checking, you may find you have a credit score.
- Consider a cosigner – While it’s sometimes possible to buy a car without a cosigner, most lenders will require you get one to qualify if this is your first car loan. Having a cosigner makes it easier for you to get approved, while having someone with good credit on the loan may even qualify you for a better interest rate. In time, once your credit has improved, you may be able to refinance your loan and remove your cosigner. Discuss with a family member or close friend if they’d be willing to cosign on an auto loan before you try to go it alone.
- Prepare for a down payment – In most cases, lenders will require that you have a down payment, especially if this is your first car loan. While down payment requirements vary by lender, the general minimum is either $1,000 or 10 percent of the vehicle’s selling price, whichever is less. Keep in mind that the higher the down payment, the better off you’ll be, as a down payment lowers your monthly payment and the amount of interest you’ll pay over the term of the loan. Use our auto loan monthly payment calculator to see what different amounts used for a down payment can do to your overall loan cost.
Start with Us
Don’t be discouraged if you have no credit history at a young age. It just takes a little time and the right opportunity to begin building your credit. In fact, an auto loan is great way to do this if you find the right lender. There are lenders willing to work with you, but we know that finding one of them can be a challenge on its own. Fortunately, we can help you navigate this challenge.
If you’re in need of a reliable vehicle and a dealer willing to work with you, Auto Credit Express wants to help. We work with a nationwide network of auto dealers that are connected to subprime experts who know how to handle credit situations like no credit or bad credit. All you need to do is fill out our auto loan request form. It’s free of cost and obligation, so get started today!
