People with bad credit aren’t the only ones who have a hard time taking out loans for a large purchase. Those that don’t have any credit face the same struggles. The only difference between the two is that having no credit means you can build it up quickly.
In the meantime, you’re looking to purchase a new car, but don’t know how to do so without credit. Luckily, there are a few ways to purchase a car without needing to prove a good credit score. And learning how to buy a car with no credit is easy!
Follow these steps and tips listed below in this guide to get yourself behind the wheel and on the road in no time. Here’s everything you need to know before heading to the dealer or other sellers.
If you’re not already a member of a credit union, be sure to sign up for an account at one. You don’t have to pay the fees for setting up a checking account if you already have one at another bank. Instead, you can open a savings account, which comes with no cost or fees at many credit unions.
You’ll need to have some type of account opened with a credit union to use their loan services. The good thing about credit unions is that they’re oftentimes more willing to work with individuals with little to no credit. There are even some programs out there offered by credit unions to help you build your credit through the purchase of a new car.
Call around to local credit unions near you and ask about their programs or offers for people looking to buy a car with no credit.
There are also no-credit lenders that are willing to help those with bad or no credit when purchasing a vehicle. The good thing about working with one of these lenders is that they don’t require you to prove a good credit score. They will, however, require you to show a stable source of income.
Showing them your income proves to them that you’re able to keep up with the payments each month. If you work a full-time or even a part-time job, be sure to bring at least one month’s worth of paystubs or other proof of income with you. Another downfall that you might experience going in this direction is that some lenders require you to purchase a vehicle from a dealer within their network.
This might come as an issue to you or not. If you don’t already have a specific car picked out somewhere else, then chances are you’ll be able to find something you like within their dealer network and this won’t be an issue for you.
A Large Down Payment
Putting down a large down payment is another way to help you purchase a vehicle without credit. Placing a large amount of money down on the car before purchase helps you lower the amount of the loan. Borrowing less money from a lender means you have a better chance of securing the loan.
If you can wait on making the purchase, then we suggest taking a few months to save up money for the vehicle before sitting down with a lender whether it be a credit union or somewhere else.
Special Loan Offers
You’ll be happy to learn that some lenders and dealerships offer special loan offers for students or recent graduates who haven’t built their credit up yet. If you’re able to find a lender that offers something like this, be sure to have an amount of money saved for a down payment and proof of steady income.
Your GPA may be another factor taken into consideration by these lenders when choosing to use a special loan offer.
A co-signer is a great way to get that vehicle you want without needing to have credit. If you know someone with good credit who you’re close to, then you should consider asking them to co-sign the loan with you. Having someone on the loan who has good credit helps you get lower interest rates as well.
Just keep in mind that this person is responsible for paying back the loan if you were to fail to do so. That means that this person is putting their own credit on the line for you.
You also might want to start looking for a buy here pay here near me dealership. These dealerships work with individuals with bad credit and no credit. If you decide to use one of these dealers, you’ll make financing arrangements with the dealer itself.
You won’t need to use a checking account or a bank to make payments. All payments are made directly to the dealer on a bi-weekly or weekly schedule. You’ll apply online before heading out to the lot and upon arrival, you’ll be shown vehicles that you qualify for.
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