How to get a car loan with no credit or bad credit

How to get a car loan with no credit or bad credit

Getting a car loan with no credit can be difficult, but it is not impossible. While it’s definitely better to have no credit score than it is to have a bad one, take steps to build up a credit history as soon as you can.  

With good credit you can more easily secure a line of credit for a large outlay, signal to prospective employers that you are a responsible person, and find it easier to purchase a home or rent an apartment. Of course, the opposite is true for having bad credit: It will make the financial aspects of your life increasingly difficult.  

Start By Saving For a Loan Down Payment

A down payment demonstrates your commitment to a car purchase and shows you have some hard work invested. Let’s be real. If you can’t afford even a down payment, why should anyone trust you with a car and a car loan, and all of the financial responsibilities those two things entail?  

One of the best things you can do to increase your chances is save for a down payment. The larger your down payment is, the better your chances of getting a loan.

Once you have saved enough for a down payment, you are ready to start your car purchasing journey.   You want at least 10% of the purchase price, but with no credit rating, try to save 20%. To get a car loan without any credit, you’ll need to do a lot of work to prove you’re a financial risk worth taking.

Gather some documentation and ask for help from family and friends before approaching the bank or car dealer for a loan.

Gather Documentation

A major factor in getting approved for a car loan is your credit history. If you have no credit history, the lender will look in other places to verify you can afford the payment and confirm the likelihood you will repay your debt.   Gather the following documentation to substantiate your history:

  1. Copy of your bank statement
  2. Documentation of any recurring bills such as a utility or phone bill
  3. Proof of employment history—multiple pay stubs should work

It is important to have, at a minimum, all the documentation listed above. Credit history is not required to open a bank account, however, it will confirm if your account is in good standing. Utility and phone bills are also easily set up without credit history and can provide proof to the lender that you can pay a recurring bill on time.

A source of a steady income is also important. The longer you have been with a single employer, the better, because it shows the lender you can hold a job for the long-haul.

Ask Family and Friends

Family and friends are a great place to start looking for help in financing a vehicle when you have no credit. If they do not have the ability to give you the full loan, it might be possible to have them co-sign on a loan.

A co-signer is an individual other than the borrower who signs a promissory note and in so doing assumes equal liability for the debt. To put it simply, you are using someone else’s credit score to purchase your vehicle.

The bill comes to you, but if you don’t pay, the co-signer is responsible for the loan— and their credit will suffer if they don’t make the payments. A late payment can damage both your family member’s credit and your relationship with them. If you do get the full loan amount from someone you know, lay out a solid plan of repayment. Consider getting help from a trusted legal adviser, so the situation is less likely to get sticky. At the minimum, you should:

  1. Agree to a set interest rate and time frame of repayment.
  2. Print out an amortization schedule.
  3. Always make payments on time and do your best to pay off your loan early.

Inquire About a Loan at a Bank or Car Dealership

If you’ve exhausted all other options, start at the bank or credit union where you have an active account. They will have easy access to your account history and will be more likely to give you a loan if you have a prior relationship with them.  

If you do not have a bank account, set one up as soon as possible. You are more likely to get a better deal at your bank than a car dealership.

However, if your bank is unable to help you, try the car dealership  . Whether you are at the bank or the car dealership, have the documentation you’ve gathered ready for their review.

A car loan can be complicated to obtain without prior credit. Building good credit is vital for your financial future. With a little planning, you will be driving your new set of wheels in no time.

While those who have little credit history or poor credit will face challenges and obstacles in qualifying for an auto loan, there are often options available for those who are buying a car with no credit and no cosigner.

How to get a car loan with no credit or bad credit

How to get a car loan with no credit or bad credit

If you’re a first-time car buyer with little or no credit history, you may find that it’s difficult to find a car loan. While those who have little credit history or poor credit will face challenges and obstacles in qualifying for an auto loan, there are often options available for those who are buying a car with no credit and no cosigner.

Challenges a First-Time Car Buyer Faces

According to Credit Karma, in some cases, you are able to purchase a car with no credit, however, you’re more likely to have to pay higher interest rates. In addition, you probably won’t receive the optimal payment options that someone who has good credit would get.

Car lenders have strict requirements before they approve you for a loan. If your income and credit history don’t meet those requirements, it’s quite possible you’ll be turned down for a loan.

Lenders look at an applicant’s credit history to ensure that the person looking for a loan has a record of paying their credit bills on time and borrowing responsibly.

In order to qualify for a car loan, you should have a credit history and income showing you have the ability to repay the loan. If you don’t have a solid credit history, a lender may not approve you for the loan.

One of the most important ways a lender determines if you’re a credit risk is by examining your credit history.

Using a Cosigner

Per Cars Direct, if you have a poor credit history and are looking for a cosigner to vouch for you, the cosigner must have good credit in order for the lender to consider giving out a loan.

There are two major obstacles that can prevent a buyer from receiving a car loan:

  • Lack of credit history. A lender needs to evaluate your credit history or credit score to see how much of a credit risk you might be.
  • Lack of a cosigner. For a first-time or young car buyer, having an adult cosigner with good credit history and score may allow you to receive a loan. If you can’t find a suitable adult with a good credit score, you’ll most likely be turned down.

Even though you don’t have good credit or solid credit history, there are ways to improve your chance of getting a car loan.

Getting a Loan Without Good Credit or a Cosigner

  • Seek a car loan lender who works with people who don’t have good credit. Some lenders specialize in this field, just be prepared to pay higher interest rates and see fewer payment options without good credit.
  • Finding an adult cosigner with a good credit history can improve your chances of getting a loan.
  • Making a substantial down payment can also help to influence a lender to give you a loan.
  • If you find a lender who can help you with a car loan when you have no credit history, understand that you’ll most likely have to pay higher interest rates than someone who has good credit.
  • Per Policy Genius, even without credit history or a poor credit score, there is a possibility that you can find loan assistance with a Buy Here Pay Here dealership program. In order to be considered for such a program, you must first have a permanent residence, a steady job, and the right amount of income. In general, once enrolled in the Buy Here Pay Here program, a cosigner isn’t necessary.

Buy Here Pay Here Loan Programs

Cars Direct explains that some car dealerships provide programs for someone who has poor credit or no credit history. Known as In-House Financing, Tote the Note, or Buy Here Pay Here (BHPH), these unique programs may help you get approved for a car loan.

One of the unique requirements to become eligible for a BHPH program is your employment history or the current job you’re in. The dealer looks at your overall income, how long you’ve been employed, and what your residence status is to determine if you’re able to make on-time payments.

If you’re trying to build a credit history, be sure that the dealer offering the BHPH program reports your payments to the credit bureaus so you can start building that credit. Because most dealers that finance in-house don’t work with third-party lenders who would normally report payments, be sure to ask the dealer if they will do that for you.

When working with a BHPH dealer, most likely you’ll get approved for a loan, but be prepared for the high-interest rate you’ll need to pay. If you can put a large down payment on the vehicle, you’ll reduce the amount of the high-interest monthly payments for the remainder of the total amount owed on the vehicle.

Be aware that the BHPH and other financing options from a dealer only allow you to purchase a used car as opposed to a new one. While most used cars are reliable and most often will suit your needs just fine, if you are wanting to buy a brand-new car, you may have to rethink using in-house financing.

When you understand how the Buy Here Pay Here program works and decide it’s not the direction you wish to go for purchasing a vehicle, you’ll need to look for other options. Check with an adult who has a good credit history or a good credit score who is willing to cosign for you as a viable option for getting a car loan.

If you feel like you’re not able to get a car loan, understand there are some lenders who are willing to work with you, no matter what your credit history or score is.

When working with a lender who can help you get a loan, you are often limited to vehicles offered at a dealership that works with no credit lenders. In addition, be prepared to show that you have enough income so that you’re able to make monthly payments on the loan.

Other Loan Options

As a young or first-time car buyer with little or no credit history, find a lender who specializes in programs designed for students or recent graduates. Instead of looking at your credit history, the lender takes into consideration your income, your GPA, and the amount of down payment you can put on the vehicle.

If you’re a member of a local credit union, you can check with them to see if they have special financing for someone with little or poor credit.

How to get a car loan with no credit or bad credit

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In this article:

  • How Does a 0% APR Car Loan Work?
  • How to Qualify for 0% Financing
  • What to Keep in Mind When Considering 0% Financing
  • Alternatives to 0% Financing
  • Monitor Your Credit Even After Getting a Loan

It may sound too good to be true, but getting a car loan with a 0% annual percentage rate (APR) is possible. These loans are typically only provided in certain circumstances, however, and to borrowers with stellar credit histories.

If you’re in the market for a new car, here’s how you can get a 0% APR car loan.

How Does a 0% APR Car Loan Work?

Zero percent APR car loans are auto loans with no interest rate. This means you can finance a new vehicle purchase, and 100% of your monthly payment will go toward the principal balance of the loan—there are no interest charges whatsoever.

Car dealers usually offer 0% financing on new cars only, and you typically need to have a very strong credit history to qualify for such an offer.

These promotions are typically available only from what are called captive financing companies—the finance arms of vehicle manufacturers, such as Ford Motor Credit Co. or Toyota Motor Credit Corp. Manufacturers use these deals to incentivize customers to purchase brand-new vehicles, which sell at a significantly higher cost than used vehicles. You may receive an advertisement from a local dealer that encourages you to check out a new car and apply.

How to Qualify for 0% Financing

It’s possible to qualify for a car loan even if you have bad credit, but having a good credit score is important if you want to qualify for a low interest rate. And if you’re hoping to score a 0% APR car loan, you’ll likely need a very good or exceptional FICO ® Score ☉ , which means a score of 740 or above.

Before you start shopping for a new vehicle, take some time to check your credit score to see where you stand. Also, get your credit report from one or more of the national credit reporting agencies (Experian, TransUnion and Equifax) to see where you stand. You can get a free report once a year from each agency at Experian also offers a free credit report every 30 days on sign in.

Review your credit report and make sure to file a dispute with the credit bureaus if you find anything you believe is inaccurate or the result of fraud. The bureaus investigate these potential discrepancies and will revise or remove them from your credit report if they find that they’re inaccurate or fraudulent.

Also, take note of any actions you can take to improve your credit:

  • Always pay your bills on time.
  • Pay down your credit card balances.
  • Avoid closing old credit cards.
  • Apply for new credit only if you need it.

If you’ve made late payments or have other negative credit items on your report, it may take a while for your credit history to recover enough to qualify for a 0% APR car loan. If you don’t need a car right away and can work on improving your score, you may qualify down the road.

What to Keep in Mind When Considering 0% Financing

You may wonder if 0% APR car loans come with a catch. The answer is yes, there are some potential drawbacks to consider:

  • Dealers may try to make up the cost elsewhere. In some cases, dealers may increase the sales price of the vehicle or add pricey fees to the contract to make up for the interest savings that you gain. Also, you may experience pressure to buy add-on products, such as a maintenance package or gap insurance. To maximize your savings, do your research on car prices and avoid products you don’t need.
  • Payments can still be high. If you’re buying a brand-new car, the monthly payment may be high even without interest charges added on. Run the numbers on your budget to determine whether you can afford the loan payments and how they might impact your ability to work toward other important financial goals.
  • They typically come with long repayment terms. To help reduce the cost of the monthly payment, dealers may encourage you to apply for a loan with a long repayment term—some go as high as 72 or even 84 months. But locking yourself into such a long financial commitment like that can make it challenging to make meaningful progress with other money goals. If you can afford it, opt for a shorter repayment term.

Also, keep in mind that you can negotiate the car loan and the terms of the sales contract. Do your research on car prices, fees, add-ons and other aspects of the car-buying process before you head to the dealership, so you can gain some leverage.

Alternatives to 0% Financing

If you don’t qualify for a 0% APR car loan, you still have other options. Credit unions, banks and auto finance companies all offer low interest car loans that may fit in your budget.

To find the lowest interest rate that you can qualify for, it’s important to shop around and compare rates and terms from several lenders. In addition to the interest rate, also look at loan repayment terms, prepayment penalties and other features that could impact your financial situation.

This process can take some time, but it’s essential to help you get a car loan that fits your budget and maximizes your savings.

Monitor Your Credit Even After Getting a Loan

Whether you qualify for a 0% APR car loan or opt for an alternative rate, it’s important to continue to stay on top of your credit in case you need to apply for credit again in the future.

Experian’s credit monitoring service not only offers you free access to your FICO ® Score powered by Experian data but also provides customized alerts on credit report activity, notices when your account balances change, and gives you the chance to increase your credit score with Experian Boost™ † .

What Makes a Good Credit Score?

Learn what it takes to achieve a good credit score. Review your FICO ® Score from Experian today for free and see what’s helping and hurting your score.

Get Car Financing
Even with poor credit.

Content Manager

David Topham is the Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands’ properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.

Lots of car buyers with bad credit want to know if they can get an auto loan with no money down. While buying a vehicle with no down payment sounds tempting, qualifying for a zero down car loan with a poor credit score typically isn’t possible. Lenders have stricter requirements when your credit is struggling, and a down payment is usually needed. At the same time, car buyers with bad credit should be aware that putting money down can be a good thing that helps them save money in the long run.

Bad Credit Down Payment Requirements

Just about every subprime auto lender – the kind who are willing to approve borrowers with poor credit – asks for a down payment. While you may have heard an advertisement for zero down auto loans, a look at the fine print will show you that these offers are for borrowers with great credit who meet specific requirements.

The lowest down payment requirement subprime lenders ask for is typically $1,000 or 10 percent of the car’s selling price, whichever is less, though the actual amount can vary from lender to lender. Your down payment can be in cash, trade-in equity, or a combination of the two. Most subprime lenders require the cash to be from your own funds, so you can’t use borrowed money or cash back from a manufacturer rebate on a new car to meet the requirement.

Even in-house financing car dealerships – which typically don’t check credit, making them good places to get financed with bad credit – usually require a down payment, though the minimum amount can also vary.

Why Bad Credit Lenders Require a Down Payment

The reasons subprime lenders require a down payment are pretty straightforward. Lenders make decisions based on risk. When somebody with bad credit asks to borrow money, it’s more of a risk than lending to someone with good credit. So, lenders look to offset this with certain requirements, which typically include a down payment.

Putting money down on a car means you’re investing your own money, which sends the right message to the lender. They see it as a way to increase the chances you’ll pay back your loan, as it’s less likely you’d walk away from a loan after putting your own money down.

A down payment can also reduce the amount you have to borrow, which makes lenders more likely to approve you – but that’s not the only benefit.

Benefits of Putting Money Down on a Car Loan

Outside of improving your chances of getting approved, here are some of the advantages of a down payment:

  • Lowers your monthly payment because it reduces the amount of your loan.
  • Can make shortening the loan term possible, which will help you save money in interest charges in the long run as you pay it off faster.
  • Will reduce the amount of time you have negative equity. Negative equity, or being upside down or underwater, is when your car is worth less than what you owe on the loan. Being upside down makes it more difficult to sell, trade in, or refinance your car, so it’s a situation you should try to avoid.
  • Reduces the amount you pay in interest charges because it lowers your principal balance from the start. This is far and away the biggest benefit a down payment offers to borrowers with imperfect credit. Bad credit car loans come with higher interest rates, so a down payment can make a huge difference in what you end up paying overall.

The larger your down payment, the more these benefits are increased, so it’s worth it to save up for a down payment in the long run.

Finding Financing with Bad Credit

If you have bad credit, a down payment is nearly always required; zero down offers are rarely applicable to poor credit customers. Even though it’s a requirement, putting money down works to your advantage, so you’re better off with one in the first place.

Another obstacle to getting a car loan with poor credit is finding a dealership that’s able to work with you. CarsDirect is here to make this faster and easier with our quick and free auto loan request form. We’ll work to connect you with a local special finance dealership, so go ahead and get started today.

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Car Financing
Even with poor credit.

Content Manager

David Topham is the Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands’ properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.

If you have bad credit and no job, it can be more difficult to get approved for an auto loan. If you have the money to buy a car with cash, you can go about the car buying process as usual. But if you need auto financing, it will be more challenging to get approved.

For starters, bad credit makes it more difficult right off the bat. The majority of traditional lenders like banks and credit unions will not approve applicants with poor credit for auto financing. Instead, you will have to find a special finance dealership that has subprime lending connections.

These lenders are willing to work with consumers dealing with credit issues, but they still have requirements that you need to meet. Typically, one of these qualifications is a minimum gross monthly income of $1,500-$1,800 (before taxes are taken out). Also, subprime lenders need at least a portion of that income to be garnishable.

This is why, if you do not have a job, your chances of getting approved are not very good. You still need to have a regular income, and most fixed income sources are not garnishable.

Other Sources of Income

If you do not have a job and are still interested in applying for a car loan, chances are that you have another source of income that you receive every month. Special finance lenders will consider fixed sources of income when they are evaluating your application.

Examples of fixed income sources that can be considered are: disability, social security, court-ordered child support or alimony, settlements, veteran’s benefits, pensions, earnings from investments/deposits, etc.

While unemployed individuals with good credit and a fixed income source may have no trouble getting the green light, people with bad credit typically have no such luck. This is because subprime lenders also need to verify your income before they will approve a loan.

From their point of view, bad credit represents more risk. They want to carefully verify that you have the ability to repay the loan because of this added risk. Also, they want your income source to be garnishable in the event the loan goes into default.

However, most fixed income sources cannot be garnished, which is why people with bad credit and no job have a difficult time getting approved. But there is still a way you can get the lender to say “yes.”

How to Get Approved for a Car Loan with Bad Credit and No Job

Once you locate a special finance dealership that works with applicants with bad credit, you will sit down with their finance manager. This person will want to know how much you get from your fixed income source every month, to ensure you meet the minimum income requirement, and, also, if it is your only source of income.

If your income source cannot be garnished, the only way that you will be able to get approved is to have a cosigner. Your cosigner has to: (1) have good or great credit; (2) meet the lender’s minimum income requirement and have the disposable income to be able to handle the loan; and (3) have a garnishable source of income.

If your cosigner does not meet these three requirements, you might have to drop the idea of financing a car at this time. A solution would be to take steps to improve your credit before applying, as “regular” lenders don’t care as much about your source of income.

If you are ready to apply for auto financing but can’t seem to find a dealership that can work with your situation, CarsDirect has the solution. We can match you with a dealer in your area that specializes in car loans for all credit situations. Our service is free and our process is fast, so get started today by completing our easy 1-Step Auto Loan Application.

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Hard to Obtain Car Finance Approval with Bad Credit Even When Unemployed?

Most of the auto loan dealers don’t provide credit services to people who are unemployed and want to get a car loan despite their bad credit histories.

Therefore, if you are currently jobless, you may have altogether drop the idea of financing a car or take steps to improve your chances of getting approved for auto financing with your unemployment record and bad credit history. Just consult an expert today!

Is It Possible To Improve Chances Of Jobless People for Getting Car Loans With Bad Credit Online

To obtain a car loan while unemployed with bad credit history, you need to locate loan dealers that are ready to provide auto loan finances to jobless individuals with or without down payments. Such a proposition might not be feasible although some subprime car loan lenders may agree to approve your application by asking you to pledge a valuable asset as collateral. If your vehicle is new then the best way is to pledge the vehicle as a security against the loan.

Reality Behind Car Loan When Unemployed People Approach Lenders

There are websites which claim that getting a car loan when unemployed can be a real possibility if you know what majority of the lenders expect from borrowers. Well, that’s not entirely true. Here is some vital information about the same.

Majority of the loan dealers may run credit checks so if you have bad credit, make sure that you take steps to improve credit

You cannot get approved for a car loan when unemployed merely because you have agreed to offer some valuable asset or the car as collateral or indicated willingness to pay down payment. Lenders will also verify your ability to repay the loan and to that effect, you must show that you have some alternative source of income in the form of post retirement pension benefits, interests on deposits, receiving alimony, searching for new job or joining a new job soon, etc.

Even if some lenders agree to grant your unemployed car loan request an approval, majority of them will charge substantially higher interest rates if your credit rating is bad to compensate for the risks involved in lending your money needed for financing car. The monthly payments will be higher and affect your budget as well thereby leading to further credit crisis.

In case, you manage to get a car loan bad credit unemployed program approved by pledging your vehicle or some valuable asset as collateral and miss few payments, you could run the risk of losing the collateral.

Alternatives To Get Car Loan Options For Unemployed People

  • If you are unemployed and need a car loan with bad credit then you need to first ensure that you have some alternative source of income for paying monthly instalments.
  • Prior to approaching various specialized loan dealers for getting an auto loan, you must be aware of the exact status of your personal credit profile
  • To secure a sustainable interest rate on your car loan for the unemployed, start saving some money every month for paying a sizable down payment
  • Before applying for a car finance of this type, you need to make sure that you have been residing in your current house for at least past 6 months to 1 year
  • To enhance chances of obtaining early jobless auto loan approval online, you can get a credit worthy co-signer for co-signing the loan which is being provided

How to get a car loan with no credit or bad credit

Find Local Help To Analyze If You Really Have A Chance To Qualify For Car Loan Bad Credit Program

Finding lenders that offer affordable auto loans for bad credit no money down programs can be a cumbersome task. But if you have some idea regarding where to look for, the overall rigors of the process may get reduced drastically. Remember, when you have bad credit, banks and credit unions may be less likely to approve you for a car loan unless you show willingness to pay a large amount of down payment. To that effect, you might only have two other options for getting your car financed. It is better that you have some idea regarding these before you start researching your alternatives.

Get Car Financing
Even with poor credit.

Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.

Getting a car loan with bad credit doesn’t have to be a hassle, and it certainly pays to be prepared. We go over lenders that can work with bad credit, and the typical requirements you’re likely to encounter.

Getting a Bad Credit Auto Loan

To get a bad credit car loan, you’ve got to find the right lender for the job. Two of the most common avenues in getting a loan with credit challenges are:

  • Subprime lenders
  • In-house financing

Subprime lenders are signed up with special finance dealerships. Subprime is another word for bad credit. Borrowers with credit scores below 660 are often called subprime borrowers. To get a subprime auto loan, your first step is finding a special finance dealership that works with these lenders. They often assist borrowers with credit challenges such as bad credit caused by life events, bankruptcy, a past vehicle repo, and other unique circumstances.

In-house financing is done by buy here pay here (BHPH) dealerships. They’re also called tote the note dealers, and they only sell used vehicles. This type of lending is unique in that the lender is also your dealer – no need for a third-party lender to approve you. These dealerships are attractive to many borrowers because the credit check is likely to be skipped, allowing for borrowers with the toughest credit scores to secure financing if they meet the other requirements. These independent dealers are plentiful across the states, and many are smaller or family-operated businesses rather than a traditional franchised dealership.

How to Qualify for a Bad Credit Auto Loan

Once you’ve found a dealer that’s willing to work around less than perfect credit, it’s time to prepare for the actual auto loan application. At CarsDirect, we’ve created a nationwide network of special finance dealerships, so we know what many bad credit lenders require to be eligible for a car loan.

The most common requirements are:

  • Down payment – Whether you choose in-house financing or a subprime lender, you’re nearly guaranteed to need a down payment. Most subprime lenders require at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price, but this varies. The down payment requirement can be met with cash or trade-in equity or a mix of both.
  • Proof of income – Proving your income is a vital part of being eligible for vehicle financing, no matter what lender you choose to apply with. Most subprime lenders require you to have a minimum monthly income of around $1,500 to $2,500, before taxes (gross). BHPH dealerships vary in their income requirements, and it’s largely dependent on the car you want to finance.
  • Proof of residency – To qualify for an auto loan, you must prove your residency. Proving your address is usually done by providing a recent utility bill in your name, or a recent bank statement.
  • Proof of a working phone – You must have a working phone in case the lender needs to contact you about your loan. Proven with a recent phone bill in your name, and the phone can’t be a prepaid cell phone.
  • Personal references – Subprime lenders usually require around five to eight personal references. Anyone that doesn’t share your address can be a reference, as long as you have their name, address, and phone number.
  • Valid driver’s license – Must be up to date with your current address. Can’t be revoked, expired, or suspended.

These are basic requirements that you must typically meet in order to get a bad credit auto loan. Depending on your individual situation, you may need more documentation or different documents to be eligible for a bad credit car loan.

Finding a Dealership With Bad Credit Lenders

Once you’ve gathered all your documents together, you can begin the search for a special finance dealership. However, that’s often easier said than done. CarsDirect has compiled a network of dealers that are able to assist with credit challenges, and we want to connect you to one in your local area.

There’s never a cost or obligation to get matched to a special finance dealership with us – so get started right away by filling out our free auto loan request form.

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Car Financing
Even with poor credit.

Content Manager

David Topham is the Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands’ properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.

If you have bad credit or no credit, a cosigner can help you get approved for an auto loan. But what if you don’t have somebody who can cosign for you, or you’d rather get a car loan without a cosigner? In both cases, there are options car buyers can explore to get a bad credit car loan without a cosigner.

Bad Credit Car Loans with No Cosigner

A cosigner signs the loan alongside a primary borrower, which legally makes them part of the loan agreement. This means the cosigner is responsible for paying in the event a primary borrower doesn’t or is unable to. A cosigner typically needs to have good credit, which is another reason why lenders may ask somebody with bad credit to have one.

But if you want to get a car loan with no cosigner, here are a few ways you can try to get approved without one:

  • Work with a Special Finance Dealership – Most lenders, like big-time banks and credit unions, automatically turn down borrowers with bad credit, so getting approved without a cosigner is even less likely. However, special finance dealerships that are signed up with subprime lenders put less of an emphasis on your credit score. These lenders rely on other factors like your income, residence, and employment to give them the ability to move forward with the financing process. They have loan programs in place specifically designed for borrowers with bad credit, making it more realistic to get approved without a cosigner.
  • Make a Bigger Down Payment – A down payment reduces the amount you’re asking to borrow, which certainly helps your shot at an approval. Putting enough money down may be just the thing to convince a lender to approve you without a cosigner. A small down payment is typically required in the first place on a bad credit auto loan, but a larger down payment also helps you save money in the long run. Putting money down lowers your monthly payment and reduces the interest charges you pay.
  • Choose a More Affordable Vehicle – Another thing you can do to improve your chances of approval without a cosigner is to pick an affordable car. Just like how a down payment lowers the amount you need to borrow, choosing a less expensive vehicle makes a lender more likely to give you the green light. If you stick to the basics and choose a vehicle that comfortably fits your budget, you’re setting yourself up for success with your bad credit car loan. This makes it easier for you to make all of your payments on time so you can use the loan to raise your credit score.
  • Wait and Improve Credit – For some, their only option for buying a car with bad credit and no cosigner is to wait. Take some time to work on improving your credit before applying for a car loan to give you a better chance at an approval. You can work on establishing a strong payment history with a credit card or two. If you don’t have one, a secured credit card is often easier to qualify for, though they require a deposit to open. You can reduce your credit card balances, catch up on any late payments, and check your credit reports for any inaccurate information that you can dispute in order to raise your credit score, as well.

These tips can help your chances of getting approved for a bad credit car loan without a cosigner. Even if you were to follow these tips, a lender may still require you to have one in some cases. In this event, there’s one other option to explore to get a car loan without a cosigner.

No Credit No Cosigner Car Dealerships

For car buyers who don’t have time to wait and improve their credit, another option to explore is in-house financing. Auto dealerships that finance loans in house are often referred to as buy here pay here (BHPH) dealers or no credit no cosigner car dealerships. The reason why is because these places finance vehicles on their own and don’t use outside lenders, so they typically won’t do a credit check.

BHPH car dealers aren’t concerned with how your credit history looks, or if you even have one in the first place. For this reason, you typically aren’t required to have a cosigner to boost your credit in order to get financed. Instead, they base approvals on your income, so what you make compared to your monthly bills determines how much of a loan you can get.

There are still a few downsides to getting financed with a no credit no cosigner car dealership. To start, your car choice is limited to used vehicles and what’s available on the lot at that time, and you may be required to make your payments in person at the dealer. Also, it’s not a given that these dealerships report your payments to credit bureaus. If they don’t, this means your loan won’t help you improve your credit the way one through a subprime lender can. Make sure to ask about a BHPH dealer’s reporting practices before signing anything if credit improvement is your goal.

The Bottom Line

Getting a bad credit car loan without a cosigner is more possible if you remember the tips you can use to improve your chances of an approval, but first you need to make sure you’re working with the right dealership.

CarsDirect can match you with a local special finance dealer for free. We work with dealerships across the country that specialize in helping car buyers dealing with less than perfect credit. Start the process right now by submitting our secure auto loan request form, and we’ll get to work on your behalf.

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