It can be scary for someone to take a leap and buy their first car, especially if they have no credit history. A lot of first-time vehicle buyers opt to simply save up enough cash to purchase an inexpensive model from a private seller. Even though they might not be getting the greatest car this way, they're afraid that they won't be approved for an auto loan.
However, even consumers with little or no credit history can still get financing approval. And it's smart for someone with no credit to finance their first car with an auto loan. This way, they'll get an opportunity to start building good credit by making timely payments.
No Credit History? You Should Still Check Your Credit Reports
The first thing that anyone who's thinking of applying for an auto loan should do is check their credit reports. Even if they think that there's little in them, it's important to be sure. Also, credit report errors are not uncommon. These mistakes can bring scores down, so they should be found and disputed as soon as possible.
Every 12 months, consumers in the U.S. are entitled to a complimentary copy of their report from each of the three primary bureaus. Reports from TransUnion, Experian and Equifax can be requested at AnnualCreditReport.com. The individual websites for each of these bureaus offer instructions on how to dispute errors found on reports and have them removed.
First-Time Buyer Programs for Consumers with No Credit History
Certain manufacturers offer financing to first-time buyers through special programs. Of course, these types of programs come with requirements that must be met. Only college graduates are eligible for some of them, while others look for applicants who have a stable employment history and a qualifying income.
Ford, Toyota, Nissan, Honda and Kia are just a few of the manufacturers that offer first-time buyer programs. Those who are interested in participating should check with a local dealership to find out whether or not they qualify.
For buyers who don't meet first-time buyer program requirements, there are other options available.
How Having a Cosigner can Help with Auto Loan Approval
Buying a car for the first time with no credit history is easier with a cosigner. When someone with a good credit history cosigns a loan, they agree to make the payments if the primary borrower defaults. This makes the arrangement risky for the cosigner, and the borrower needs to understand the responsibility involved.
Typically, a cosigner should be a close friend or family member who knows the buyer well. This cosigner should also be aware of the fact that their credit will be affected even if every payment is made on time. This is because the loan will show up on their credit reports. So if they already have existing debt, this extra loan might make it hard for them to finance a large purchase of their own in the near future.
Special Financing for Buyers with Bad Credit or No Credit
If someone is looking to buy their first car and they're not eligible for a first-time buyer program and they have no cosigner, they can still get financed. There are special finance lenders out there that can work with bad credit or no credit.
These lenders have their own requirements regarding income, residence stability, and employment. Basically, they want to make sure that a buyer has the means to make their car payments. So anyone who thinks that they could manage a monthly payment if they were just given a chance should strongly consider this option.
Most special finance lenders aren't available to be contacted directly. Instead, interested buyers should locate a dealership with special finance connections. How? One of the easiest ways to find the right dealer is to contact Drivers Lane.
At Drivers Lane, we can match you with one of the many dealerships in our nationwide network. We can quickly find a dealer in your area that works with unique credit situations. And it won't cost you anything. You may even be able to buy your new or used vehicle with little or no money down.
Our service also comes with no obligations. So go ahead and fill out our simple and secure auto loan request to get started today.