How to Get Financing as a First Time Car Buyer

Being a first-time car buyer with bad credit or no credit history, you might feel like the odds are stacked against you. It is natural to think that way. However, it might not be as bad as you may think or see it. The truth is that you can still get an auto finance even with your bad credit or non-existent credit history but this may work as a disadvantage for you as your lender will see you as a high risk borrower. As a result of this, you might not have the opportunity to negotiate the most favorable deal.

People with good credit and excellent credit history stand a better chance of getting auto finance from auto lender with very accommodating terms and interest rates because they have the negotiating power and are not high risk borrowers to the lender. 

However, there are auto lenders who specialize in working with people with bad credit or non-existent credit history. Hence, these type of lenders are the most suitable for first-time car buyers seeking an auto loan with bad credit or no credit history. In order to get the best deals as a first-time car buyer with bad credit or no credit history, we will consider the tips below that can be helpful.

Important Tips for First-Time Car Buyers with Little or Bad Credit History

• Fix Errors in your Credit Report: Thoroughly go through your credit history to see if there are errors turning things from favoring you. Make sure all payments reflect and even if you do not have any credit history still try as much as possible to check what’s in there. : If you have a means of making a down payment, it will go a long way in alleviating the financial stress. Making down payment means the loan amount is reduced, your monthly payment is smaller, and you can get a better interest rate.   
• Add a Cosigner: Adding a co-signer when you apply for an auto finance will help to increase your chances of getting approval, the loan terms are more accommodating, and you can get a lower APR.
• Apply with Different Auto Lenders: When you apply for different lenders, it will help you to compare the loan terms from these lenders when you are approved.
• Boost your Credit Before Applying: This is another option available for first-time car buyers. Work on improving your credit score before applying for an auto finance, the Consumer Financial Protection Bureau particularly recommends this step. You can get a store card or secured credit card, or be added as an authorized user on a credit card in order to have a credit history. Imbibe habits that will reflect positively on your credit report like paying your bills on time, and do not exceed your credit card limit.  

In conclusion, when you are planning to buy a car for the first time and you have bad credit make sure you go with lenders and dealerships who will work in your best interest so that you do not fall into more financial difficulties.

Read more about buying a car via https://www.nerdwallet.com/blog/loans/how-to-buy-a-car/.

About This Author

Charles Brighton Joined: August 13th, 2019