Credit history impacts several aspects of our lives, and while every hardworking individual strives to make cash payments in one lump sum to make the process easier, the hard truth is that almost every adult relies on their credit score to qualify for different loans.
So if you’re ready to get behind a wheel and drive off to the open road with your first dream car, it’s likely you’ll need a car loan to turn this into reality. It will be tricky to purchase a new or even a used vehicle without an established credit history, but don’t give up! There are other options to shop for a car loan with no credit, so let’s put the pedal to the metal on this topic and head on to find out.
Getting a Car Loan: No Credit vs. Bad Credit
No credit and bad credit seem interchangeable, but the two are far off each other in more ways than one. Having a bad credit score means you already have a financial history recorded under your name—be it through your credit card purchases, borrowing from a bank, or getting other types of loans—but the difference is that you’ve made monetary blunders in between.
On the other hand, no credit history means you don’t have any experience borrowing money from any financial institutions or don’t own a credit card. Getting a credit card seems usual for most American adults, but a 2017 study done by the Consumer Financial Protection Bureau (CFPB) found that many areas in the US lack direct access to reliable financial sources.
Getting a Car Loan with No Credit History
1. Find a Reliable No-Credit Car Loan
When getting your first vehicle with no credit, you can start a positive history by shopping for car loans that don’t require any credit. Different lenders work with all credit profiles—from the good, the bad, to the lacking, so long as you have proof of a steady source of income.
2. Collaborate with Credit Unions
If you don’t have a credit profile to show to lenders, the best alternative is to go to credit unions since they’re primarily open to helping applicants get the opportunity to borrow regardless of their history. Good Neighbors Credit Union, for instance, can help you shop for a car loan while jumpstarting your credit profile in one go.
3. Get a Co-Signer
You can also speed up the process by going to a lender with a willing and well-grounded co-signer who can assuredly pay off your loan. This is one of the easiest ways to qualify for a loan with a low-interest rate!
The Bottom Line: Starting Your Credit Journey with the Ideal Auto Loan
The good news is that no credit history means you can start anew and prove to lenders that you can be a responsible borrower, but expect their opinion of you to be the same as those with poor credit scores.
In this scenario, the only similarity in both cases is that borrowers with a long and impressive credit history will always get the better end of the stick, making the no-credit car loan one of the best choices. While it’s highly recommended, there are no hard rules for borrowing money, so the right solution should be the one you can afford to pay over time.
How Can We Help You?
Good Neighbors Credit Union is committed to serving a diverse membership. From under-served individuals to those stronger individuals seeking accessible and stress-free banking alternatives, we got you covered.
We offer a range of products, services, tools, and resources that empower our members to take control and manage their finances, inspiring them to reach their fullest potential. Are you looking for a credit union in Lancaster? Reach out to us today!