There is nothing quite like the thrilling experience of purchasing your first car. You will finally have the freedom to go just about anywhere you want without having to rely on someone else. Unfortunately, the process of buying a car can be a little tricky for most young adults that do not have any credit. It is currently estimated that only one percent of car buyers are under the age of 25. Thankfully, there are a few things you can do to finance a new car without having any credit.
Get a Cosigner
The easiest and most effective way to get approved for financing without any credit is to have someone else cosign the loan. This person is essentially guaranteeing that they will pay off the car loan if you are short on money. This guarantee removes almost all of the risk for the financing company, so they are willing to give you the money. In addition to making it easier to get a car loan, using a cosigner will also drastically reduce your interest rates. It is best to use a close family relative with great credit as your cosigner.
Save Your Money
Financing companies are hesitant to give out big car loans for people without any credit history. It will be much easier to get approved for the financing when asking for a small loan. Since nobody wants to drive a cheap car that will not last, you will need to save a lot of money to use as a down payment. A big down payment proves that you are serious about owning a car. It also shows that you are responsible with your money. A down payment of 20 percent is generally recommended for qualified buyers, so you will likely have to pay off half the car up front in order to secure financing without credit.
Take Your Time
It is vitally important to take your time when trying to finance a car without any credit. Do not settle for the first loan you find just because you got approved. If you can get approved by one financing company, then you will be able to get a loan from others too. Take the time to shop for the best interest rate. It is usually easiest to get a reasonable interest rate with a financing company that specializes in car loans for people without credit.
The dreams of owning a car do not have to die just because you do not have any credit. The process is certainly not easy, but it is definitely possible. If you follow these tips, then it is only a matter of time before you are behind the wheel of a new car.