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Can You Buy And Finance A Car With No Credit? [ANSWERED]

Can You Buy And Finance A Car With No Credit? [ANSWERED]

Buying a new car often relies on having good credit, but people who do not have credit also need cars. They are left wondering if they can finance a car and how to go about the tricky car-buying process with no credit.

The answer? Yes, you can buy and finance a car with no credit. It takes consistent preparation, time, and budgeting, but it is possible to accomplish when you are committed to the process. There are also certain challenges you will face.

You can use several methods and techniques to help buy and finance a car when you have no credit. We will share some ways you can help yourself buy and finance a car with no credit in the following sections.

closing contract car

Save for the Down Payment

The best way to help yourself buy a new car when you have no credit is to save up money for a down payment. The more money that you can put towards your down payment, the less you will have to pay monthly down the line.

Additionally, for folks with no credit, paying a large amount of the down payment upfront can help your odds because you do not need to take out as big of a car loan. The smaller the car loan you request to take out, the more likely you are to get approved for the loan.

This is a viable option if you have no credit or bad credit.

Saving up money for a down payment works for many people, but some folks cannot afford to start putting money to the side. If you fall into that category, you should consider some of the other options in this article.

Saving money for any reason is often stressful for many people, so to make sure that you are going about achieving your goals this way, please read on so you can learn more.

How to Save for the Down Payment

Saving for a down payment is a long-term goal that you should not expect to accomplish after a few paychecks. You will most likely have to put yourself on a long-term budget that can sustain you and contribute to your savings goals.

Every person is different, so a budget plan that works for one person may not work for you. That is okay! The first step is to get a grasp on your finances and your spending habits. This is an important step in budgeting and saving for a down payment.

Begin by assessing your spending weekly and monthly. From there, categorize what you spend money on by whether or not it is a need or a want. Look at your list of wants and try to eliminate some things that are small in cost, but add up over the month.

This may be buying coffee every morning, buying plastic water bottles daily, or going out to eat frequently. Commit to cutting out some of these money drainers and substitute them with cost-efficient options. Make your coffee a to-go cup, buy a reusable water bottle, do more cooking and eating at home.

Once you have cleared out some room in your budget, you can further budget and designate a monthly saving goal for your down payment.

If saving for a down payment is not a viable option for you, do not worry! There are other ways.

Finance Through the Dealership

If saving for a down payment and a smaller car loan is not something you can do, then financing through the car dealership might work.

Car dealership financing comes in two methods. The most common way is when a car dealership will take your application and give it to several outside lenders. The dealership will negotiate the financing on your behalf. Once a settlement has been reached, the dealership will offer you a loan from a third-party lender.

The second way is offered at dealerships that have in-house financing. In-house financing is when dealerships can offer you loans directly, with no third-party lender. The interest rates are often much higher than third-party lender loans and these loans will not build your credit, but they are an option for people who do not get offered a third-party loan.

If you are puzzled, look at this table to compare the two options:

Third-Party Lender In-House (Dealership) Lender
-Dealership shares your loan application with their pool of outside lenders who evaluate it -Dealership evaluates your loan application
-Your dealership negotiates the terms of the loan with the lender (the financing,) on behalf of you -You advocate for the terms and financing of the loan yourself
-Third-party lender offers you a loan -Dealership offers you a loan
-Typically has lower interest rates -Typically has higher interest rates

You may need to provide proof to both in-house dealerships and third-party lenders that your income is high enough to effectively pay off the loan.

Financing Tips and Tricks

There are several ways to try and get the best out of your lender, including discounted interest rates or other special treatments. Some dealerships have discounts, like the following:

  • Active military personnel
  • Retired military personnel
  • Students
  • Recent graduates
  • And others depending on your dealership

Others allow cosigners and collateral, which are two more ways to increase your chance of getting approved for a loan with no credit. Let's look at these more in-depth.

dealer car

Dealership Accommodations

Students are often given accommodations as they typically are in school or recently graduated and have not had time to build their credit. If you are a student, take advantage of this. Ask car dealerships if they offer a perk like this.

If you have recently graduated or are working full-time while in school, lenders will feel fairly certain that you will be able to pay them back, so if you play your cards right, you can get a car loan with no credit!

Cosigners and Collateral

Getting someone to cosign with you on a car is a great way to increase your chances of getting accepted for an auto loan. Cosigners are like a payment safety net, so if you do not pay, the lenders have another person they can hold responsible and receive payment from.

Cosigners become legally involved, and they will be held liable for your car loan. If you miss payments or pay late, this can (and will) affect their credit score badly. This can make it hard to find a cosigner for some people.

If you cannot find a cosigner or the dealership you are buying from does not offer cosigning options, then you may be able to go the collateral route. Collateral is when you put an item of equal importance to the loan, like maybe another car or something, as security. So if you miss or are late with loan payments, the lenders then have the right to take away that item.

Credit Unions

Another option to buy a car with no credit is using a credit union. Credit unions are usually very helpful to people who do not have credit looking to buy a car. Often, you can be eligible to join a credit union through your place of employment, a relative, or discover one in your area.

You can get car loans from credit unions and sometimes even get help building your credit. Credit unions are a great resource for those with no credit.

Also read: Missed Car Payments and Repossession [WHAT TO KNOW]

Can You Buy a Car With No Credit?

Yes, you can buy a car with no credit! It takes a bit more time and energy as well as advocating for yourself at the dealership. There are plenty of people who buy cars and do not have credit.

If you want to be one of those people, then make sure you are taking the necessary steps to appear to lenders (both in-house and third-party) that you are trustworthy and capable of paying your loan back.

Buying a car with no credit can be difficult, but do not fear. It has been done by plenty of people before, and by using the right techniques in this article, you can help yourself get the car you want.

Can You Finance a Car With No Credit?

Yes, you can finance a car with no credit. Getting decent terms and interest rates on your car loan can be difficult when you have no credit, but you can use many of the techniques and tips in this article to help advocate for yourself and get the best financing deal you can.

Do not be afraid to ask dealerships, lenders, and credit unions questions about their policies. Just like you are applying for a loan from them, they are trying to get your business. Make sure that the terms are acceptable for someone with no credit.

Keep reading: Car Down Payment On Credit Card – Good Or Bad Idea?


When all is said and done, it is possible to buy and finance a car with no credit. You will have to budget, save, and negotiate for yourself more than others, but that comes with the territory of not having credit.

Spend the time and energy to get your new car, and then spend some time on making your credit score better!

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