Things to Know When Buying a Car with No Credit History

Car Salesmen Tricks They Do Not Want You To KnowYes, the way things are set up it looks as if you have to have credit to buy a car. The reality is somewhat different, however. While it does help, buying a car with no credit history really is possible—even if you aren’t the latest Powerball winner.

Here’s what you need to know.

Your Credit History

And, right about now you’re going “Wait, what the…?”, but getting a copy of your credit report is important, even if you think you have no credit history. Remember that student loan you took out to go to school? That’s on your credit report. And, if it’s still in deferment, credit agencies will look upon it as being in good standing—even if you haven’t started repaying it yet. You might have good credit and not know it. That’s why you should check your credit first.

No History Is Better Than Bad History

If you’ve had a loan and defaulted on it, creditors are going to look the other way when you walk through the door. OK, not literally—but they will hold their noses when they review your application. Yeah, that’s an exaggeration too.

Bottom line, if you’ve had a shot and blew it, you’ll be In much worse shape than if you’ve never had a shot at all—especially if you can demonstrate a steady income, low expenses, and a reasonable car choice.

Most mainstream car companies have first-time car buyer loan programs. You could qualify for one if this is your first go at buying a car. A number of online lenders have similar programs. Look into one of the no credit history car loans like RoadLoans.

Cash Solves Everything

If you can pay cash, nobody cares if you have no credit history. However, if you’d like to start one, you can use a big chunk of that cash to make a substantial down payment and take out a loan for the rest. Lenders tend to look favorably upon people who minimize their risk, so you’ll get a loan. When you get it, pay it off after a month or two with the rest of the money and voila, you’ve got a fresh credit history.

Cosigners are Cool—But…

If you’re lucky enough to have someone in your life willing to share their stellar credit record with you, that’s a true blessing. Just know if you screw it up, they’ll probably never trust you again—ever. When someone agrees to cosign a loan for you, they’re saying they are willing to pay if you don’t.

Most people don’t have too much trouble saying this—as long as they believe they’ll never have to do it. Put somebody on the hot seat for trying to help you out, you can bet that’s the last time they’ll ever be willing to do so. In other words, you should only ask someone to cosign for you when you’re absolutely, positively, 100-percent certain they won’t get stuck paying for your car.

While it’s much easier when you have one, you can buy a car with no credit history. In fact, sometimes you’re better off trying to buy a car with no credit history than if you have one.

Just keep in mind; anybody willing to take a chance on you is likely to be rather disappointed if you let them down. One of the most important things to know when you’re buying a car with no credit history is you shouldn’t do it if you can’t afford to pay.

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