Can You Buy A Car Without Credit?

Published on Aug 15, 2014 01:24 pm

For most people, purchasing a car is one of the most common life events where credit is used. It can help make a broader range of vehicles available and may provide favorable financing options to those can’t afford to buy a car in cash.

But what if you don’t have an established credit history or you’ve made some mistakes in the past and have no one to co-sign with? There are still options available to people in these kinds of straits, but they take a different approach that’s more than just thrifty.

  • Check your credit report before you start
    You’ll probably want to examine your credit report carefully before starting your search, to get a good sense of knowledge of where you stand, since that’s what lenders may see to make their determination. Since your score may be a deciding factor in the interest rate you might be offered, it’s important to address any concerns you might have before you head to the dealership. 
  • Explore alternatives for financing
    If you need help financing your purchase, buyers with poor or no credit may fare better applying for an auto loan with their personal banking institution or credit union. While it’s no secret that dealers may be more convenient, your bank or credit union may be able to offer better rates. Vetting your finances on a more personal level can allow them to offer terms better fit for your situation. 
  • Save toward your down payment
    If you can’t show an extended credit history to a lender, you may need to offset that lack of information with a larger down payment. This may help lenders perceive a minimized risk —and at the same time, you’ll save on interest over the lifetime of your loan payments. But, if you’re trading in your current vehicle, remember that value will also help increase the size of your down payment, too.
  • Consider used vehicles
    Letting an initial buyer sort out new-vehicle factory issues and absorb up-front depreciation costs is a great way to be smart with your purchase. Limiting your search to used vehicles may help your dollar go further, so don’t forget to factor in other potential costs, such as if there’s time or mileage left on the original warranty to cover any future maintenance costs that may pop up. Be sure your budget is realistic, and once you commit to it, stick with it! 

Being realistic about your options, even when things seem difficult, will help you gather the facts about where your opportunities remain. Depending on their situation, different types of potential buyers find themselves as a low or no credit purchaser, but they don’t let it derail their search.

Get Your Free Experian Credit Report No Credit Card Required

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from, Inc., an Experian company.   © 2014, Inc.  All rights reserved.

More like this