Get a Used Car Loan with No Credit History

Can you get a used car loan credit if you do not have any credit history? Yes, you can. However, the process is not without it's challenges and difficulties. Comparatively, having no credit history places you in a similar category as someone with a bad credit history. The restraint used by a prospective lender in most cases will translate into high interest rates for you. Having no credit history simply translates that you are unable to demonstrate that you are an acceptable credit risk. The difficulty that the lender faces in granting your loan immediately puts you in a high interest category.

Steps to Securing a Used Car Loan With no Credit History

The following steps should be taken prior to meeting with any prospective lender. Be prepared to have to deal with sub-prime lenders. Most traditional lenders may not even consider your used car loan.

1. Securing a co-signer with a good credit history will improve your position.

2. Having a decent down payment will allow you to negotiate a better interest rate and repayment term. While 10% down is a significant way to reduce the interest, 20% down could reduce your interest even more.

3. Have a checking account in your name prior to applying for your loan.

4. Demonstrate your financial responsibility by showing that you pay your bills on time. Utility bills, rent and telephone bills are a few good examples.

5. Establish accounts in your name with retailers or other credit card companies. Do everything possible to remain in good standing with these companies.

6. Prove that you are gainfully employed and have a solid employment history. Make copies of several of your recent pay stubs. Ask your employer to supply a letter of reference on your behalf. Establish your longevity and likelihood of continued employment.

7. Secure letters from references that demonstrate that you pay your bills on time. Your bank may be willing to write a reference that demonstrates that you are not overdrawn or that you have a history of writing bad checks.

Lastly, don't rule out your existing bank when faced with no credit history. Some banks and credit unions have first time buyer programs for college graduates. Once you secure your loan, make all of your payments on time. Having established a successful payment history will create the opportunity for you in the future to refinance your used car at a lower interest rate.

 


Need an Auto Loan? Get a Free Quote Here!