Credit Loans

How To Get a Car With No Credit or Cosigner

Cars can cost thousands, which is why many people choose to finance the purchase through an auto loan. However, getting a car loan can be challenging when you have no credit. And on top of that, if you don’t have a cosigner, then it can make things even more difficult. However, there are alternatives available when trying to get a car with no credit or cosigner—continue reading to find out more about them. 

How Does Credit History Impact a Car Loan?

Credit history is an integral part of the application process with auto loans and any other lending. Your credit history is kept in a credit file with each one of the credit bureaus—Equifax, Experian, and Transunion. When you apply for a loan, a lender will access this information to better understand how you have handled your debt, the types of credit you have experience with, and any other data on your credit. Having little or no credit history can sometimes be as detrimental to your application as having poor credit. Because your lender doesn’t have any information, they cannot really determine the lending risk.  

How Does a Cosigner Help With Car Loans?

A cosigner is usually a family member like a parent or spouse with a solid credit history that you can add to your loan application (as long as they agree). When a person cosigns a loan, it means they take on the responsibility of repaying it if the primary borrower does not. 

Because of this additional security with a loan, a lender may be more willing to give out funds. Before adding a cosigner, it’s crucial to think about the consequences that could happen to the other person if you miss any payments, default on the loan, or defer car loan payments—which will harm credit. Any negative or positive actions you take with your loan will also impact your cosigner’s credit score. 

Although a cosigner with a good credit score can be helpful, not everyone has access to that option. But the good news is that there are alternatives to using a cosigner that can also increase your chances of approval with auto loans. 

Options if You Want To Use a Car Loan Without Credit and a Cosigner

Okay, now that you know a little more about credit and what it means to have a cosigner with a car loan contract, you may wonder what your options are if you have neither. Here are some options if you still want to pursue an auto loan for your car purchase. 

Getting a Co-borrower for a Joint Loan

If you have someone in your life that doesn’t want to be a cosigner, consider asking them if they would like to be a co-borrower instead. A co-borrower in a joint auto loan equally owns the vehicle and is also responsible for making monthly payments. If they have a good credit history, it can increase your chances of approval even with bad or no credit. 

Have a Larger Down Payment 

Having no credit in the eyes of lenders can be the same thing as a bad credit score or poor credit history. And so, when working without credit or a cosigner, having a large down payment may increase your chances of getting approved for an auto loan on a new or used car. The more you can put down, the less the lender has to give out. And so, put down as much as you can! 

You can pursue a loan option for a down payment if you do not have the money upfront. With no credit, you may be eligible for small personal loans. You may also come across a payday loan online or a title loan option for bad or no credit histories. But, it is best to avoid these high-interest loan options. 

Look Around at Different Lenders

You can find car loans at banks, credit unions, online lenders, and car dealerships. Dealer financing can vary the most. Dealerships can have promotional periods, special financing offers, and sometimes be more flexible with borrowers with no credit or poor credit scores. Some online lenders may also provide flexibility. On the other hand, a bank or a local credit union may have stricter credit requirements. And so, be strategic with who you inquire with; start with dealerships and online lenders for the best chances of approval with no credit and no cosigner. 

Build a Credit History

Another thing you can do is take your time to build your credit. If you have no credit history, getting a standard loan or credit card can be difficult, but there are other options. You can apply for a credit builder loan or secured credit card. You can also get your rent reported to help your credit score or become an authorized user on someone else’s credit card to start building credit. Once you have some credit, you can apply for smaller loans like a personal loan and work your way up to larger options like a car loan. 

Alternatives to a Car Loan for Consideration

Getting a car loan with limited credit history or cosigner can be challenging, so you may want to consider other options to buy a car. Here are some alternatives to car financing you can look into:

Buy a Used Vehicle or a Cheaper Vehicle Than What You Initially Wanted

One thing you can do for a car purchase is buy a car outright. Some cars are more expensive than others, and buying a new vehicle over a used one can also increase the purchase price. And so, by being smart about what vehicle you are buying—even if it is a downgrade from the car you initially wanted—can mean getting a car without taking out a loan. 

Save Some Money To Buy the Car Outright

Even a used car can cost thousands of dollars; if you don’t have the money upfront, you should consider saving some money over time. Even saving a few hundred dollars a month can really add up to help you cover the total cost of a car. 

Get a Side Gig To Pay For Your Car

Another thing you can do if you need money for a car quickly is to get a side job. There are all kinds of things you can do depending on the skills you have. You can look into freelance or contract work for all sorts of jobs, which can come with flexible hours. For an even easier startup, look at the service industry; you can walk dogs, house or pet sit, rideshare driving, or do personal shopping. Even a little bit of extra money each week can be extremely helpful in your goal of buying your car. 

The Bottom Line With Buying a Vehicle Without Credit or a Cosigner

Most people look to auto financing options when purchasing a car. However, it can be challenging to get a loan without a credit history and a cosigner. The good news is that there are options out there that may be able to help you secure a car loan even with those setbacks. And there are ways to buy a car outright.