Can You Finance a Car With No Credit?

Car key and money

Yes, you can! Financing a car with no credit will be more challenging than if you had established credit, but it isn’t impossible. There are steps you can take to improve your chances of getting approved for an auto loan, so you can drive home in the car you need for reasonable rates and terms. Xpress Cash has put together the following guide to help you better prepare for the application process!

Financing a Car with Bad Credit or No Credit

Unfortunately, if you’re financing with no credit or bad credit, you won’t benefit from low down payments or low interest rates — they’ll be higher. Make sure you know your budget and how much you can afford to pay each month. Additionally, keep the following tips in mind before, during, and after the financing process:

  • Don’t assume the worst. You may have a better chance of getting approved for a car loan than you think. Ask questions to see if there’s anything you can do to improve your standing, or if there are any other options available to you.
  • Work on your credit score. If your credit needs improvement, use your credit card to make small purchases and pay them off immediately. If you have outstanding debts, set up a payment plan with the creditor or lender to make your debts more manageable.
  • Know how much you can afford and the state of your credit report. Your credit score can be negatively impacted when you apply for a car loan. If you’re applying to multiple lenders, do so within a two-week period to control the damage.
  • Negotiating and financing aren’t one and the same. Even if your credit isn’t in great shape, you can still weigh your options. Many dealers work through more than one lender, so don’t accept the first offer you’re given.
  • Be prepared to pay more over time. if you’re financing a car with no credit or bad credit, it’s likely you’ll have to pay a larger down payment and higher interest.
  • Consider leasing a car. Contrary to popular belief, leasing a car isn’t always the best option for car shoppers with no credit or bad credit. However, it depends on the creditor and lender. In most cases, you need a credit score of at least 620 to lease a car.

Can Financing a Car Improve Credit?

While applying for financing can initially damage your credit score, the negative effects are only temporary. When you take out a personal loan, your credit is impacted for a short while, but as you make payments on time and in full, your credit begins to improve. It’s the same with a car loan. A large part of your credit score is based on repayment history and a debt utilization ratio; if you make payments consistently, your creditworthiness will increase and your debt utilization ratio will decrease.

Get More Financing Tips from Xpress Cash!

Xpress Cash is your source for financing tips to help you navigate car loans, personal loans, cash advances, and more. While we don’t currently offer bad credit car finance services, we do assist customers with title loans, personal loans, and installment loans from our branches in Michigan, Idaho, and Wisconsin. Contact us with any questions!