When you start shopping for a car, you might be more concerned with additional features and specialty paint jobs than you are about the monthly bill. Unfortunately, the wrong financing can cost you dearly. Compound interest never sleeps, which means that you might be paying much more than you should if you work with the wrong lender. I want to help you to make great financial decisions, which is why I created this website. However, if you can remember a few tricks and keep those payments to a minimum, you can drive away with the car of your dreams without breaking the bank.
Having no credit means that you have no credit history. This means you've never had a bank account, a credit card, or a loan. Before you're able to buy a car, you'll have to take certain steps when you have no credit history.
Step 1: Open a Bank Account
You must have a bank account in order to have a credit history. It's not necessary to have credit to open a simple savings or checking account. If you don't have much in terms of finances or an income, look for an option that offers a free checking account. This means you won't need to have a minimum balance nor will you be charged a monthly fee.
Step 2: Start Saving for a Large Down Payment
Most car purchases will require some kind of down payment. This is usually 10-20 percent of the car's value. The larger the down payment the better it is for you since it will reduce the amount of money you'll need to pay later. It will also mean smaller monthly payments and these can be easier to fit into your budget.
Step 3: Gather Your Paperwork
Gather any financial document that is relevant to your creditworthiness. If you've taken out a credit card, you'll need copies of your credit history. If you don't have this but you've made bill payments such as for utilities or to your cellular carrier, ensure you have the accompanying documents. You'll also need your bank statements. These documents are to show that you're able to pay your debts.
Step 4: Trying Taking Out a Bank Loan
Your bank is the first place you should turn to when you need to buy a car with no credit. You already have a relationship with the bank and they're more likely to give you a loan when you don't have a credit history. Since you're already a customer, the bank is likely to also offer you a better interest rate than anywhere else.
Step 5: Check for Loan Options at the Dealership
In case the bank turns down your loan application, your next option will be to check at the dealership where you plan to purchase the vehicle. Ask the dealership if they offer bad credit auto loans, but remember that their rates are likely to be higher than what you'll get from the bank.
If you wish to qualify for lower rates when you don't have a credit history, you could also consider getting a co-signer for the loan.Share