Financing a Car With No Credit

Posted: Saturday, July 13th, 2019

Although it’s more difficult to finance a car with no credit vs. good credit, it’s not an impossible feat for St. Louis drivers! Is a no-credit car loan the right option for you? Or, are you considering financing a car with bad credit? Green Light Auto Credit can help you decide which route is best for you, based on your credit and budget. Review our handy guide below to learn more about how car financing works when your credit needs work.

How to Finance a Car with No Credit or Bad Credit

If you’re financing a car with bad credit or no credit history, keep in mind that your down payment will probably be higher than usual. Additionally, your auto loan will likely have a higher interest rate. Before you move forward with applying for financing, take some time to do the following in preparation:

  • Ask questions about your loan options and don’t underestimate your chances of being approved. Even if your credit needs work, you probably have more than one financing option. Find out what those options are and make the best choice for you. Dealerships often work with multiple lenders, so the first offer won’t be the only offer.
  • Check your credit score and credit history. If your credit score is low, one way to boost it is to use your credit card to make small purchases, and then immediately pay them off.
  • Keep loan applications to a minimum. Apply for an auto loan can temporarily ding your credit score. If possible, restrict your loan applications to a 14-day period to help keep your credit score intact.
  • Don’t be surprised by higher costs. If you have no credit or bad credit, the costs associated with car financing will be higher, because the lender will consider you more of a risk than a borrower with good credit.
  • Review your budget and decide how much you can afford. Before you finance, you’ll need to figure out how much you can afford in terms of a monthly payment. This will help you narrow down your car options.
  • Use a cosigner. If you have a close friend or family member who’s willing to cosign your auto loan, and their credit and income are good, they may improve your chances of getting approved.
Happy customer

How Much Does a Cosigner Help on Auto Loans?

If you have bad credit or no credit, you may be wondering, “How does a cosigner affect an auto loan?” It depends — a cosigner can affect a loan tremendously or not at all. When choosing a cosigner, it’s recommended to stick within your closest circle, i.e. your family and close friends. You’ll also want to be careful who you ask; your cosigner will need to have good credit and a steady income. If they don’t, the chances of their signature leading to an approval for you is minimal.

It’s also important to consider the potential affect cosigning with a family member or friend could have on your relationship. If you’re unable to make payments for whatever reason, the resposbility of the loan will fall to them. Both of your credit scores will be on the line. So, it’s essential that they know and understand the risks before agreeing to cosign for you. There’s also the possibilty you’ll need to remove your cosigner down the road, so keep that in mind as well.

Learn More About Your Bad Credit Car Finance Options!

The finance team at Green Light Auto Credit makes financing a car with no credit or bad credit easier than you might think. We offer plenty of options to Florissant and St. Charles drivers who need help financing a car with bad credit. Contact us to learn more about your next steps or apply for financing online.