When you have no credit, it can be hard to make some big purchases, like buying car. However, it is not impossible to buy a car without credit. Auto financing with no credit is one option available when you are buying a car without credit. Before you go into bad credit auto loans, you need to know a few things about auto financing a car with no credit.
First of all, you need to know that your interest rates will be higher, or you might be asked to make larger down payments. You may even have to do both which depends on the dealership's policies. Auto financing with no credit can have high interest rates anywhere between 15% to 20%. This is to be expected since you have no credit to show how dependable you are as a debtor. However, you don't have to stick to the first dealership that offers you auto financing with no credit history. It would be in your best interest to shop around dealerships and find your best deal. Some may not allow auto financing with no credit history, but others may allow it and have better rates comparatively.
Take Your Time
This leads us to our next point when auto financing with no credit. You do not have "yes" to anyone to any financing deal right away. You are allowed to take your time during the process and you are allowed to ask questions. In fact, it would be in your best interest to ask as many questions as possible concerning auto financing with no credit. As mentioned before, you can shop around town and gather information about potential sellers you want to buy from. Auto financing with no credit is not something you can rush into, and you should make sure to consider your current financial situation before saying "yes" to the first deal offered to you.
Make a Good Down Payment
Lastly, consider making a higher down payment even if you are not asked to by the dealership. They more you pay on the down payment, the less you have to pay back later and without the additional interest. This can also help you get a better rate when auto financing with no credit since the seller will see that you can afford putting down such a large payment. However, putting down a higher down payment is something you should plan ahead about and should only do if you can afford it.