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Can You Buy a Car if You Have No Credit?

Can You Buy a Car if You Have No Credit?

By Jessica Leshnoff • June 30, 2020

Buying a car. Love it or hate it, it’s something many of us do at some point in our lives, and it typically involves a car loan.

If you have no credit, or a very short credit history, you may be wondering if you can buy a car at all. The good news is that you still can. It may take some extra steps, but getting a new car is within reach.

From dealer financing to buying a car with a cosigner, here are some ways you can buy a car with no credit.

Save for a down payment

When it comes to buying a car, the more you can pay up front, the better. This is especially true if you don’t have a credit history. While this may not be possible for everyone, supplying a larger down payment means you’ll need to borrow less money, making it more likely you’ll get approved for a car loan. A budget calculator is a simple way to figure out how to meet your savings goals.

Use a cosigner to buy the car

One of the easiest ways to get a car without credit is to have someone cosign for you. This provides lenders with a safety net that your auto loan will be repaid, even if you fail to make payments.

Remember, however, that buying a car with a cosigner means that your cosigner is legally responsible for your loan. Late or missed payments will reflect negatively on their credit score. If you’re thinking of asking someone to cosign, here’s some information to have on hand about what to expect when cosigning on a loan.

It’s important to note that some lenders, such as OneMain Financial, don’t allow cosigners. They will, however, accept collateral – such as another vehicle, motorcycle or RV – to secure the loan. Another option with some lenders is to add a co-borrower on your loan.

Explore credit unions

Credit unions are often more willing to provide car loans to applicants who don’t have strong – or any – credit. Some even offer credit-building loans1 to help you build a stronger credit profile. An added bonus? Since they’re not-for-profit, credit unions typically offer loans at lower rates than other lenders. If you’re not already a member of a credit union, see if you’re eligible to join through your employer, a family member or search for a location-based credit union in your area.

Finance through the dealership

Dealer financing takes two forms. The first, and more common, form is that a car dealership submits your application to a number of different lenders, negotiates auto financing on your behalf, then offers you a loan through a third-party lender. An alternate method can be found at “buy here, pay here” dealerships, which offer in-house financing, often at much higher interest rates than traditional auto loans. While this type of financing won’t build your credit, it may offer a way to get a car if you don’t have any other options.

Ask about special financing for students

Some lenders and automakers offer special accommodations for students and recent graduates that have little or no credit. While you’re car shopping, ask dealerships if this is something they offer. Keep in mind that other factors come into play, such as income, down payments and even GPAs.

Have hope and keep an open mind!

Buying a car with no credit can be challenging, but it’s not impossible. Applying for an auto loan with a cosigner or waiting until you save for a down payment may be new ideas to consider, but these options can give you a two-fold advantage: a new car and the opportunity to build credit for future purchases.

1 Musinski, Bob. “What Is a Credit-Builder Loan (and Should You Get One)?” (accessed March 4, 2020).

The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal or any other advice specific to you the user or anyone else. The companies and individuals (other than OneMain Financial’s sponsored partners) referred to in this message are not sponsors of, do not endorse, and are not otherwise affiliated with OneMain Financial.