A major concern for those with low or no credit is how they can finance a vehicle. It may seem difficult or even impossible to purchase a car when you have no credit, so many people work with a co-signer to help them secure financing. But no matter what your credit score is, it is possible to purchase a car even without a co-signer. This quick article will get you started on your journey toward owning a car of your very own.
Why Does Credit Matter?
Why does your credit score and credit history matter when you’re trying to buy a car? The vast majority of car buyers have to take out a loan to cover such a large purchase. The lender looking at your application wants to ensure that you are responsible and trustworthy enough to pay back the money they lend you. So, your credit score is a good tool to see how trustworthy you are.
Some of the major factors within your credit history include how many accounts you have open, your credit utilization, and your on-time payment percentage. The higher your credit score is, the more appealing you are to lenders.
What Do Lenders Consider When You Have No Credit?
But what about if you don’t have any credit at all? What can lenders look at in this case? Typically, one of the first things they will ask about is your employment and residential history. If you have a stable job, are working full time, and have been at your place of employment and residence longer than 6 months, these are all helpful factors in getting you approved. Your lender will be more confident that you have the stability and income necessary to repay them.
Now, how can you actually get a car without a co-signer or credit?
Save for a Down Payment
This method to get a car without a co-signer or credit may take a while, but it can be one of the most effective. If you don’t want your credit to be a factor in your car purchase, you’ll need something else to present to lenders to show you’re a good candidate for a loan. Having a down payment is a great way to prove that you’re dedicated and responsible enough to take on a major purchase such as a car.
The rule of thumb is to save for a down payment that is at least 20% of the price of the car. However, when you have little to no credit, you’ll likely want to present an even larger down payment. This also has the added benefit of reducing your monthly payments, making it easier to keep up with the remainder of what you owe.
Buy Here, Pay Here
You’ve likely come across car dealerships that offer Buy Here, Pay Here programs (also known as in-house financing or Tote the Note programs). These programs are specifically designed for those with little or no credit, and they can often prevent you from having to bring in a co-signer. However, these types of dealerships are known for not reporting to the credit bureaus when you pay positively and only reported if you become delinquent. It is their way of capturing your repeat business whether you like it or not. Be wary of these dealerships and read the fine print.
Find a Subprime Lender
You may think that, if your credit score is low, there’s no chance of working with a traditional lender. Luckily, that’s not true. There are specific lending agencies that help those with low credit scores to secure an auto loan. While you may pay slightly higher interest rates than someone with a high credit score, you can still benefit from qualifying for a loan, owning a car, and working to build your credit score.
Work with FA Financing
If you want to work with a lender but aren’t sure where to look, start with FA Financing. Our team has more than 20 years of experience helping San Diegans with little or no credit to get the loan and vehicle that is right for them. We represent all kinds of situations, including those with multiple auto loans, multiple repossessions, or recent bankruptcies.
We work to highlight the strengths of your credit application and increase your chances of approval, even if you have little or no credit. To get started, simply fill out our quick pre-approval application to receive a free quote. Then, we’ll give you an approval decision and ask for a few documents to get started building your loan application. Finally, select from our catalog of vehicles and find a few that interest you. Then, we can begin working with lenders on your behalf to help you secure the financing you need.
Getting a car with no credit or cosigner may take a little extra effort, but it is entirely possible. Not only can you experience the pride of car ownership, but you can also work toward improving your credit at the same time. Contact FA Financing today to see how we can help!
