How to Get a Car Loan with No Credit

Do you need a car loan but have less than stellar credit? Buying a car with poor or no credit is much easier than buying a house without credit once you know how.

It's true that getting approved for car loans today is tougher than it was several years ago; however, there are still options available even if your credit is downright bad.

Just How Bad is Bad Credit?

Every lender is unique as far as their criteria for loan approval, but in general you are considered a bad credit risk if your FICO score is less than 660. If you've filed for bankruptcy within the last five years or have a large amount of credit card debt, you'll also find shopping for approvals challenging.

Other Factors to Consider

In addition to your credit score, lenders look at the amount you're putting down and the car you're buying. Getting approved for a new Range Rover when you'll need to borrow $50,000 will be much more difficult than buying a new Prius for $20,000, for example.

How to Get a Car Loan with No Credit

Getting approved with no credit is slightly different than getting approved with bad credit. Many people will tell you to get a cosigner if you don't have established credit yet. Having a parent or spouse cosign your loan can not only get you approved for the car loan, but can also get you on the path to establishing credit history.

Another option if you have no credit is dealer financing. Some lots offer "Buy Here, Pay Here" financing deals on used vehicles. These types of offers have become fairly common, and shopping around from several lots could get you a better interest rate. Unfortunately, you'll have to settle for whatever type of vehicle the dealer will approve you for with this type of financing.

Shopping Around is Always a Good Idea

It doesn't matter if you have no credit or bad credit, shopping around for the best deal can save you thousands of dollars over the life of the loan. Just because you have a less-than-stellar credit score, don't assume that you have to accept a double-digit interest rate to get your car loan approved. Joining a credit union could be one avenue to a single-digit interest rate regardless of your credit score.

Check Your Credit Reports for Errors

It's always a good idea to check your credit reports before shopping for an auto loan. Your credit scores are based on the contents of your credit reports, and mistakes can be costly. The government requires credit reporting agencies to provide a free copy of each of your credit reports every year at the website If you find mistakes in your credit reports, you'll need to dispute the errors and allow enough time for the correction to be reflected in your credit score before applying for a car loan. You can get your credit score at no cost to you with LendingTree's free credit score.

Getting approved for a car loan without credit isn't as difficult as you would think. Investing time and care into your finances can get you approved without the double-digit interest rates that many car buyers with poor credit have come to accept.

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