After comparing prices and going on more than a few test-drives you’ve finally picked out the perfect vehicle for you. All that’s left is signing on the dotted line. But wait, there’s a problem. You’re in need of a car loan, but you have no credit history. Are you at a dead end, or can you buy a car without a well-established credit score?
Getting Behind the Wheel
Unfortunately, having no credit history makes purchasing a car much more difficult. When getting approved for a car loan, lenders take into account your credit score as an indication of your ability to make your payments. If you don’t have an established credit history, you’ll likely be viewed as a riskier candidate for a loan, and you’ll pay much higher interest rates than someone who has a long history of on-time payments.
Pedal to the Metal
But before you hit the brakes on your dream of a new car, here are a few options for buying a car with no credit history:
You are more likely to drive away with a loan if you find a co-signer who has good credit. In co-signing, someone agrees to add his or her name to your car loan. The co-signer is thus taking on the responsibility of being equally on the hook for payments in the event that you don’t pay them on time.
Increase Your Down Payment
The likelihood of getting approved for a loan depends on the size of the loan. If you put up a larger down payment, you may have a greater chance of getting approved for the now-reduced loan amount.
Find the Loan for You
Depending on your current situation, you may have expanded options. Some lenders, like Volkswagen Financial Services for example, offer car finance to their group cars. Since the car and the finance both are in-house, the chances of getting a car loan approved increases manifold. Check for such in-house finance companies if you are looking to buy a Volkswagen Group car.
So, the short answer is yes, there are ways you can buy a car with no credit history.
Down the Road
Of course, getting a loan on your new ride is much easier if you can show your potential lender that you have good credit history. If you’d like to start establishing yours, and perhaps put off that vehicle purchase for a little bit while you build your credit. It just takes a little work: making payments on time, keeping your debt low and monitoring your credit score, among others. If you’re considering applying for a first-time car loan without a credit history, you must opt for Volkswagen Financial Services to finance your brand new Volkswagen Group car.