There are many people out there who just do not know where to begin when it comes to getting a new car loan, especially if they do not have a credit history or any debts to speak of. Well, first of all it is important to note that you must first acquire some kind of credit before a lending institution will grant you a loan to cover the cost of the vehicle. No one is going to just give you money for the heck of it! You must have a decent credit score to prove you are responsible enough to repay the debt in full.
How to gain credit?
By paying off a loan! As you can see, it is tough to get a new car loan if you have no credit history, but that does not mean that it is outside the realm of possibility.
First off, it would be wise of you to set up some accounts in your name. If you pay your own bills, then you can usually get a great reference from your utility providers to give to a credit agency. Credit agencies also look favorably upon someone who pays their phone bills on time! Do you have a checking or savings account? Get a letter of reference from your bank showing how you never overdraw. Do you have a great paying job? Proof of income at a good job is a great way to look good to a credit agency and can also help prove that you are financially fit to repay the debt.
But for individuals who do not have the time to gain credit and are in need of a car right away, your only choice may be to find a co-signer. As long as the co-signer has good credit and a stable job, you should have no problem getting the loan you need. Be aware that if you default on the loan, it will also affect your co-signer’s credit score as well. So if you go this route make sure you have the money to pay the monthly payments, if not, both of your credit scores can go down the drain.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.