Can You Finance a Car with No Credit?

Couple looking to finance their car with a loan officer

If you are a new car buyer who has yet to establish credit, you may be wondering if financing a car with no credit is possible. The answer is yes! While it can be a bit more of a challenge, it is certainly not impossible. Alexandria Volkswagen is here to discuss no credit car loans and steps that can help you through the approval process.

Tips for No Credit Financing

When you’re financing a car with no credit, keep in mind that you will likely need to make a bigger down payment, and you will have higher interest rates. You will need to factor this wiggle room into your budget to ensure you can make your monthly payments. Here are a few tips for car shopping when you have not established credit yet.

Don’t Assume You Will Be Denied

If you have not built a credit history, you may believe that your financing options are limited. That is not always the case. Don’t hesitate to ask questions and see if there are other options available that would be more beneficial for your driving needs and budget.

Boost Your Credit Score

There are ways to boost your credit score before applying for an auto loan. Work out a payment plan and start paying off any outstanding debts. You can also use your credit card for small purchases and pay off those amounts immediately after.

Be Careful When Applying for Loans

Did you know that your credit score can take a hit simply by applying for credit? To minimize any potential damage to your credit score, try to complete all applications within a 14-day period.

Don’t Feel Pressured to Accept Any Offer

Do not feel pressured to accept the first offer you’re given just because your credit needs work. Most dealerships go through multiple lenders, so if you believe a better offer is out there, why not go for it?

Be Prepared for Higher Costs

The unfortunate truth is that having no or bad credit is going to make your loan more expensive. You’ll likely receive a higher interest rate, larger down payment, or both. Prepare your budget for that eventuality, and keep in mind that paying your loan on time will improve your credit. Once it has, you can refinance for a better deal.

Alexandria Volkswagen Makes Financing Hassle-Free

Financing a car with no credit history is possible! The finance experts at Alexandria Volkswagen would be more than happy to walk you through the entire process and answer any questions you may have along the way. Contact us today for more information, or begin the financing process from the comfort of your own home with our online application.

Alexandria Volkswagen 38.8365955, -77.0597743.