When you buy a car with an auto loan, lenders will use your credit score to determine whether you’re a trustworthy borrower. If you have bad credit or no credit, you’ll have trouble finding a lender that offers favorable interest rates or loan terms. 

Don’t worry– you don’t have to give up on getting your new car. Many people, especially young adults and students, have poor or zero credit, but they’re still able to obtain loans by following a few helpful tips. Keep reading to discover five ways to buy a car with bad credit or no credit. 

Improving your credit score can be a frustrating experience. You need to open lines of credit to build your score, but it’s challenging to get decent terms and interest rates when your score is too low or nonexistent. 

Read on for five steps you can take to purchase a car with bad credit or no credit without taking the short end of the stick.

Monitor Your Credit Rating

Your first step should be checking your credit report. Equifax, Experian, and TransUnion allow you to review your credit for free once a year. Your credit report will show your personal information, credit payment history, credit score inquiries, and account details.

If you’ve never opened a line of credit, you won’t have a credit history. Either way, monitoring your credit ensures that you catch any suspicious activity and keeps you informed on changes in your credit score.

Set a Budget

A new car is a major expense, so you need to set a budget to avoid putting yourself into financial hardship. Take a look at your current expenses versus your income to calculate a monthly car payment you can afford. 

If you haven’t started already, you should set aside money each month to go toward a down payment. People with bad credit or no credit will have less favorable loan terms and a higher interest rate, but a sizable payment upfront can significantly cut down on your monthly bill.

Do Your Research

Take the time to research various cars and dealerships to find a deal that works for you. You likely have a specific type of vehicle in mind, whether for commuting to work or driving your family around town. 

If you’re trying to improve your credit, it’s best to choose a car that fits your budget to ensure that you can always make your bills. Consistent, on-time payments are essential to building credit.

Get Pre-Approved

Many banks and dealerships will approve loans for individuals struggling to get a higher credit line due to bad credit or no credit. You can try searching your local area for lenders willing to accommodate your situation. 

Some loans can take years to pay off, with interest that quickly builds up. However, your credit score will go up over time, and you’ll have the option then to refinance your loan. You can take out a new loan with better terms and a lower interest rate to pay off your existing loan, saving you a lot of money in the long run.

Visit the Dealership

Once you have a solid idea of your credit, budget, and the vehicle you want, it’s time to visit the car dealership. Ideally, you’ll have a sizable down payment in hand or a pre-approved loan from another lender. 



You could also bring a family member or close friend to cosign the loan for your new vehicle. Having someone cosign allows you to piggyback on their good credit to get better terms and interest rates. However, missing payments will negatively affect their credit as well as yours.

Conclusion

If you want a new car or a higher credit limit, but you have bad credit or no credit, contact us at 1803 Capital, LLC. We can help you finance a loan for your new car or refinance when your credit improves. Call us today at (866) 267-8113!