When credit is important in the purchasing of major assets like cars, how does one buy a car without credit? If you have yet to build credit, there are two options available to you.
1. PAY IN CASH
The easiest way to purchase a car without credit is by paying cash. You need not worry about having no credit history if you have enough cash to pay for the vehicle’s full price.
Paying a car with cash may be easy, but saving for a car fund is not. If you intend to be a cash buyer, you need to seriously save up for the purchase. Put aside a specific amount each month or seek other sources of income to grow your money to your target amount. Do away with unnecessary purchases so you can finally have your own car.
When selecting a car to buy, you have to be realistic with your choice. Consider a reliable ride that is within your budget. The more expensive the vehicle, the more money you need to save.
2. GET AN AUTO LOAN
If paying a lump sum upfront for a car is not realistic for you, do what most car buyers in the country do—get auto financing. You can build credit by making car payments. Do the following to successfully secure an auto loan.
- Save for a hefty down payment
Start saving for a generous down payment. You are more likely to obtain a loan despite having no credit history if you have money to put down on the purchase. Dealers are fine with a 5 percent down payment, but aim higher. Your goal must be 20 percent of the purchase price, which is the ideal down payment according to auto industry experts.
- Consider getting an auto loan from your bank or credit union
Try to apply for auto financing at a bank you have a relationship with. If you are a member of a credit union, you try to apply there as well. Traditional lenders such as banks and credit unions don’t usually give no credit auto loans, but they may accommodate you if you or your family are long time customers or members.
- Have a co-signer
When you have no credit and you apply for an auto loan, you would need somebody else’s credit to get approval. It is absolutely necessary for you to get a co-signer. Your co-signer must be someone with good to excellent credit who agrees to share the loan obligation with you.
When you take out an auto loan, be considerate and keep your co-signer in mind. Remember that the loan is your main responsibility and that making payments on time each time is important. If you default, you co-signer’s credit will suffer because the loan is also reflected in his or her credit report. Your relationship with the co-signer will be affected too.
- Choose your lender wisely
Even if you are unable to get an auto loan from your bank or credit union, you have many other options to explore. Be careful in choosing your auto loan lender; while there are many legitimate no credit auto loan lenders in Boston, some are just scammers out to prey on car shoppers who have limited options because of their credit situation. You are less likely to become a victim of a scam if you research on your potential lender and verify if they are a legitimate business before you send a loan application.