Getting a car loan with bad or no credit at all can be a daunting task. More than daunting actually. Even when you go to a lender and explain your circumstances to them, they will run the numbers the same way, and once they have verification that you have no score, either they will throw you out or ask you if you have a credit-worthy co-signer. There are some things you must keep in mind if you want to buy a car with no credit.
Have Patience and Don't Act Out Of Desperation
First of all, don't automatically assume that you will not qualify. If you do, when you get the first offer you will be inclined to take it because you feel you will not be able to get anything better, even though you might. You must have a strategy. List all the potential lenders, starting with institutions where you have accounts as well as credit unions and smaller banks.
Do Not Be Afraid to Ask Questions
Ask if they make loans to people with no credit and how the process works. If they say yes, get as much detail as you can out of them. However, you need to demonstrate that you are sure to be a good risk. Certain factors, like a steady income, bills paid on time, and a good down payment will work in your favor. You must be able to support your arguments, because at the end of the day, all lenders want to be paid… and on time.
Dealerships have access to multiple lenders. Even if you were rejected for financing, you could still haggle without feeling the pressure of accepting the first deal you get. What you should do is negotiate the price of the car first before telling them about financing, then ask about it once you come to a price. Just mention that you are curious about their financing deals. Do not agree to credit repair products whatsoever.
Be Prepared For the Possibility of Paying More
With bad credit or no credit score, lenders will require that you pay a higher interest, ask for a larger down payment, or ask for both. Of course, the rates will vary depending on the lenders, but you should be ready for anything between 10 and 20 percent. You might also have to provide about 20 percent down payment.
Now, you are probably on a small budget and thinking that there is no way you can afford this, but don't let it scare you. You can scale back to a basic car that will not stretch the loan for a long time. If you finance beyond the warranty, you will be creating more financial problems. If not, you can lease instead, and you won't even be stuck with the car, after some time, you can trade up. If you are on a small budget and want to buy a car with bad credit, simply consider these factors to make an informed decision.