Buying a Car With No Credit History

Buying a car without credit history can be as challenging as buying a car with bad credit. Lenders are hesitant to loan money---whether for a home, a vehicle or a credit card---if the consumer does not have a history of showing she has paid her bills in the past. While you may be able to find a lender who is willing to offer credit, it will be an easier process if you can take six months to establish credit prior to attempting to finance a vehicle. If you do not have the time to establish your credit history, there are other choices to obtain financing for your vehicle.

Instructions

Have a Co-Signer

1

Find someone who is willing to be a co-signer on the loan. A co-signer is someone who is willing to take the responsibility for the debt. He will not make the payments for you but in the event you do not pay, he will be held liable for the debt. The co-signer should have good credit.

2

Review your finances carefully to determine the monthly payment you can afford. Consider the additional costs of insurance as well as the cost of repairs.

3

Take your co-signer with you to the car dealership or the bank where you wish to obtain financing. He will need to give the lender his personal information to complete the application and show proof of income.

4

Select a vehicle that is less than the amount the lender is willing to loan you. Consider the extra expense of tags and titles.

5

Make all payments on time. By making payments on time for a 12-month period, you should be able to refinance the car solely in your name.

Establish Credit First

6

Apply for a secured credit card. Check with your local bank or credit union to see if it offers a secured credit card. If not, your goal should be to find a secured card that offers an interest rate lower than 10 percent, has an annual fee of less than $40 and reports to all three credit bureaus.

7

Send in any deposit required to establish the secured credit card. Your deposit is used as collateral and will be equal to the credit line requested. A small credit line is sufficient for establishing credit.

8

Make all payments on time for six months. After the sixth payment has been reported to the credit-reporting agency, pull a copy of your credit report and take note of your credit score.

9

Proceed to your bank or car dealership of your choice to inquire about financing. Inform the lender of your monthly payment range. Bring proof of income.

No Credit or Bad Credit Lender

10

Find a car dealer that advertises a willingness to loan to people with bad credit. Even though you do not have bad credit, your situation of no credit history is similar.

11

Prepare to pay a much higher interest on any loan you may receive. Also be prepared to have a down payment. It is unlikely you will be approved for a car loan without a down payment when you do not have good credit.

12

Visit the financing department of the car dealership. Have proof of income and advise the representative of the maximum payment you can put down. If possible, bring someone with you who has financed a vehicle in the past so you have support.

13

Make all payments on time and within 12 months, you can refinance the vehicle with a lower interest rate.