Can You Buy a Car With No Credit History?

Buying a car for the first time can be daunting. This is especially true if it’s the first time you’ve ever applied for a loan of any kind. With no established track record by which to assess your promise to pay, it’s going to be kind of hard to convince someone to write you a five-figure loan. 

However, all is not lost, you can buy a car with no credit history. 

Here’s how. 

Save a Big Down Payment

Lenders are a bit less reluctant to work with you when you have a lot of your own skin in the game. The thought is you worked hard to amass the sum you used as a down payment, so you aren’t likely to just walk away from it. Moreover, their money will be secured by an interest in the car. 

If you default, they’ve “bought” the car at a discount when they repossess it and can easily sell it for a profit.  Most experts recommend a down payment of at least 20 percent of the purchase price to stave off depreciation over the life of the loan. 

Come in higher than that, you’ll find a lender willing to back you. 

Get a Cosigner

Rather than borrowing money, you can borrow credit from someone who has a strong history. This will usually be a close friend or a family member with a good income and a high credit score. Essentially, they’ll promise to pay off the loan if you don’t. Bear in mind though, this is a huge favor, honor, show of faith — whatever you want to call it. 

This person is putting their financial best interests on the line to help you out. Therefore it is paramount you be absolutely sure you can cover the loan so they won’t have to do so. Many a wonderful relationship has been destroyed behind a co-sign gone badly. 

Don’t be that person. 

First Time Car Buyer Programs

College student and recent graduates can often qualify for a first time car buyer loan. School doesn’t have to figure into it at all n some cases. You can still get special consideration if it’s your first time buying anything on credit. 

Yes, you will need to prove you have the income to make the payments, as well as a steady enough job to keep making the payments until the debt is satisfied. 

However, there is help available for you. 

Shop Around

One lender might say no, but another one might say yes. The only way to find out is to ask. However, you must be careful to find out if they will give you a loan before you fill out an application. Your credit score drops each time a lender runs a credit check on you. 

While the minimum credit core is 300, you’ll come in above that with no credit history at all. However, everything you do wrong before you do have a credit score will push you farther toward that minimum number. 

Ask before you apply.  

The Bottom Line

So yes, you can buy a car with no credit history. However, with the exception of finding a cosigner, the interest rate you pay will be higher than if you had a credit history for a lender to o consider. Interest rates are based upon the perceived creditworthiness of the applicant. If you have a long history of solid payments, your credit score will be high, and your interest rate will be low. 

If you don’t, well, it won’t, but you can still buy a car.