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Four Tips for Auto Finance With No Credit

If you’re looking to buy your dream car, opting for auto finance options is possibly your best bet for affordable car ownership. However, lenders will typically need to evaluate your credit history to determine whether you are a responsible or a risky borrower. But with about one in every six Americans lacking a credit history, according to Creditcards.com, sometimes it can be hard to land a suitable auto finance loan with favorable rates.

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Without a credit history, you will have to take a few extra steps to assure lenders that you will not default. Here are four tips for seeking auto finance with no credit:


Save Up the Down Payment

Lenders will typically require you to provide a down payment when looking to buy a car, according to Bob Gillingham Ford – the Best reviewed Ford Dealer in Ohio. The down payment you have to provide will vary with the size of loan you are shopping for. A borrower who can afford a significant amount at the onset of the buying process tends to be considered as financially responsible.

This means that you will find it easy to provide the remaining amount. To be safe, save up the down payment to portray yourself as a less risky borrower. If possible, pay more than the required amount as this will also help you avoid having your loan underwater.

Talk To Friends and Family Members

Those closest to you, be it family or friends, can be of great help if they can provide you with a good part of the car’s purchase price. If not, you can also request a close friend or family member to co-sign the loan with you. You will have to use their credit score to get financing for your vehicle, but you will be responsible for the ad hoc payments.

By so doing, they absorb equal liability for the loan which means that they will offset it in case you default. As a result, be careful not to miss any payment as this will not only damage the co-signer’s credit score but also your relationship with them. In case you attain the full amount from a loved one, ensure that all the nitty-gritty details of the repayment are laid down on paper.

Activate Your Credit History

In case you are willing to wait a while before buying your car, why not build your credit history. It will take you around six months to build a high credit score to earn car loans at a low rate. Start by looking for a secured credit card with a small credit line. Make small purchases and offset the balance in time. Additionally, ensure that your credit utilization ratio is below 20%, or at most 30%, as noted by Investopedia. This will help you build a high credit score.

Watch Out For Hard Inquiries

Every time that a lender accesses your credit report to determine whether you are a worthy borrower, they leave behind a hard inquiry. While a single inquiry can’t hurt, multiple ones over a long period will lower your score and reduce your chances of landing favorable loan rates. However, most credit card models tend to treat inquiries during a period of between two weeks to 45 days as a single one.

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In case you choose to build your credit score from scratch, ensure that you shop for auto loans within the above period to avoid damage from the hard inquiries. Hard inquiries tend to last one to two years, after which they will no longer affect your score.


Lenders need to be sure that you are financially responsible before offering you a loan to avoid losses. In case you cannot provide enough documentation to showcase this, then the above strategies can be lifesavers. Consider using the above tips to drive out of your car dealership in your dream car.





Welcome to the Night Helper Blog. The Night Helper Blog was created in 2008. Since then we have been blessed to partner with many well-known Brands like Best Buy, Fisher Price, Toys "R" US., Hasbro, Disney, Teleflora, ClearCorrect, Radio Shack, VTech, KIA Motor, MAZDA and many other great brands. We have three awesome children, plus four adorable very active grandkids. From time to time they too are contributors to the Night Helper Blog. We enjoy reading, listening to music, entertaining, travel, movies, and of course blogging.

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