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No Credit Auto Loan — How It Works

Can you get a car loan if you have little or no credit? The answer is yes, but you need to do some planning and work in advance of buying your next car. Here are some tips on how to increase your chance of success to get financing with little or no credit.

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Check your credit history — Even if you haven’t secured credit cards or other sources of credit, you may have a credit history. More important is the fact that your credit history could have errors affecting your rating. If you go to the Consumer Financial Protection Bureau website it shows you various ways to get a free copy of your credit report. You don’t have to pay someone to get your credit report — it is free and can be obtained once per year. Fix any errors before you proceed with your car search.

Determine your budget and what you can afford — Take a hard look at your finances in total before you take on a car payment. Look at everything you spend each month against your income. Remember that loan interest rates change so allow some extra in case your loan requires a higher interest rate. There are budget and car payment calculators available online.

Shop around for your loan and be prepared for a down payment — Even with little or no credit, there is no reason to accept the first loan offered to you. There are lenders out there willing to accept no-credit loans. You may need a larger down payment so knowing that early will allow you to start saving sooner. Also, accept the fact that you will not get a prime interest rate so be prepared to pay more. When looking at lenders, don’t forget credit unions and other sources; you don’t have to depend on banks alone for your loan.

Determine if you need a co-signer — If you have no credit history, lenders may require you to have a co-signer for your loan. A lack of credit makes it harder for lenders to determine your ability to pay a loan, so a co-signer is used to provide a guarantee that someone will be responsible for the payments.

When you are ready for your next car in the greater Woodside NY area, come to Automania. We are a CARFAX® Advantage Dealer and offer NIADA Certified Pre-Owned vehicles. You can also apply for financing by going to financing page and filling out our online application. For more information about our financing or other questions please call 718-255-1353.

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