Buying a Car With No Credit: 2 Minute Guide

Buying a Car With No Credit: 2 Minute Guide

Posted on March 25, 2021

Can you buy a car with no credit in Georgetown? Will lenders even look at your application if you have no credit score or no history of credit? Our Georgetown auto loan team finds out!

It is possible to get a Georgetown auto loan with no credit but your options will be limited. The interest rates will also be higher too.

The importance of credit histories

Lenders depend on your credit score and history to assess whether you’re a high or low risk when lending. As they don’t know you personally, your credit report is all they have to go on.

The more you borrow, the more a lender can tell whether you’re good with debt or not. If you have had credit cards and loans over a number of years and never missed a payment, your credit report shows you’re likely a low risk borrower.

If you’re new to Canada, haven’t used credit and have no entries in your credit report, how is a lender to know what kind of borrower you are?

Lenders may still offer auto loans but they will charge higher interest to insulate themselves from potential loss. It’s nothing personal, it’s just how the market works.

If you haven’t used credit much or don’t have a very high credit score, what are your options?

Buy a car with no credit

If you have a low credit score or no credit, you still have options. You can work with a specialist lender who offers no or bad credit car loans, you can use a co-signer or save up for a significant down payment.

Use a bad credit car loan – Bad credit car loans work for people with no credit as well as those with poor credit. Lenders look more at your situation and ability to pay rather than just your credit score. They are a viable option when looking for auto loans.

Use a co-signer – An auto loan co-signer is a loan guarantor. That means they will be legally obligated to step in and pay the loan if you default. You can ask family members, friends or anyone you know to be a co-signer. If they trust you enough and have a good credit history, they can help you access an auto loan.

Put a lot of money down – If you’re in a position to save or can put down 60% as a down payment, a number of lenders will overlook no credit. That size of down payment almost guarantees they won’t lose anything if you default as they will just repossess the car and sell it. This can make all the difference.

Build credit – This final point is valid but won’t help you get an auto loan for a while. It will take around 18-24 months to build sufficient credit to access standard auto loans. If you can wait that long, building credit is very worthwhile. If you don’t have the luxury of time, this is something you should do alongside the auto loan.

Whatever your credit situation, our Georgetown auto loan team can help. We could even find you a car to buy at the same time!

When you’re ready for a car loan, get in touch with the Georgetown car loan experts at Northway Ford for great deals on auto finance.

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