It’s almost impossible to get anywhere without a car, depending on where you live. Some cities have public transit, but for the cities where public transit isn’t too common, a personal vehicle is the only way most people can get around.
It’s the way most people get to work, to school, and to the grocery store. Not only that but now, you can use your personal vehicle as a means of work, by working for ridesharing companies such as Lyft or Uber. To try and go without a car in this day and age can be very difficult, especially if you don’t have any credit established.
When looking to purchase a car, most dealerships perform a credit check to determine not only if they’ll work with you, but what terms they’re willing to offer you. With credit checks, people have mixed views on bad credit vs. no credit. The reason that people without credit scores often run into trouble buying a car is that there’s no clear record to demonstrate that you’re responsible enough with money to pay the dealership back. With bad credit, the car dealership is able to see that you have established some credit history, and were creditworthy at one point, even if you’ve lapsed in or missed some payments.
That at least gives the dealership an idea of what type of borrower you could possibly be. Either way you look at it, bad credit, or no credit, you still have options available to buy a car. We’re going to take a look at ways you can purchase a vehicle with no credit.
If you have absolutely no credit, paying cash is one of the top ways to purchase a car. You don’t see too many people just paying cold hard cash for a car, unless they’re celebrities, but if you indeed do have the cash to buy a car outright, then more power to you!
Paying for everything in cash was the most common practice a few decades ago. I can recall my great-grandfather when I was younger, just walking into the dealership, asking my great-grandmother what she wanted. She pointed at the car she wanted, and he told the salesman, “we’ll take that.”
Paying cash can also save you a great deal of stress and anxiety. You don’t have to worry about a monthly car note! Those car notes have gotten lots of people in trouble because they’ll try and purchase a vehicle, get approved, but end up with an outrageous car note. After so long, they won’t be able to afford those pricey payments every month, and eventually, end up getting their car repossessed. So, if you have the cash to give for a car, go for it! You’ll save yourself from possible headaches!
Use a Bad Credit Loan
Bad credit loans are helpful for those with zero credit, just as much as they are for those with bad credit. This type of loan would really come in handy for when you didn’t have the funds to make the down payment on your car. This goes for any car dealership. Sometimes it’s just easier to go in the dealership with cash in hand. Having zero credit or bad credit already looks bad enough on you… you don’t want the dealership to have any other reason to paint a negative picture of you.
Use a Buy Here/Pay Here Dealer
Going with a buy here/pay here dealership is a popular choice among those with no credit. The process is easy and pain free. You will have to put down a down payment as you would at any other dealership, but at buy here/pay here dealerships, the down payment is nowhere near what it would be at a traditional car dealership.
Now, just like any other dealership, they will require additional information from you. Some pieces of information include: your driver’s license, references, and proof of income. Even with buy here/pay here dealerships, they still need to know if you’re going to be able to make your monthly payments. They’ll base that off decision off of how much you make, so your debt-to-income ratio plays a major role here.
The only thing about buy here/pay here car lots is that you run the risk of getting a “lemon”. All cars at these places are used, so you definitely want to be sure you’re making the right choice. You can be sure by asking that dealer to provide you with a Carfax report. A Carfax will tell you that car’s life story, in terms of ownership, maintenance, and accident history. It will tell you if the car has been stolen, if it’s been in a flood, and any accidents that generated either a police report, or insurance claim. So, sometimes, you really do pay for what you’re getting. I’m not knocking these types of car lots by any means, but If you are going to go with a buy here/pay here lot, do your research not only on the vehicle, but on the dealership as well…check their ratings and reviews.
Get a Cosigner
Having zero credit, a cosigner will do wonders to strengthen your approval odds. Not saying that if you don’t have any credit, it’s an automatic denial, but the odds are definitely against you. When considering using a cosigner, one thing to keep in mind is that they must have good credit, in order for you to get approved for the car.
The car dealership needs to see your cosigner’s credit score to form a decision on whether or not they think you’ll hold up your end of the bargain on paying them, and if not, how likely it is that your cosigner pays on your behalf. You have to understand: being a cosigner for someone is a big responsibility and a big risk. They’re the one being held accountable if you slip up.
So, before asking someone to be your cosigner, really sit back and think if you’ll actually be able to make the monthly payments. Cosigners are typically close relatives or friends, and you don’t want to put your loved one in a financial pickle. Nothing’s worse than falling out with a dear friend or family member over money. Sad to say, but it happens all the time.