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Is it Possible to Get a Car Loan with No Credit?Posted On October 26, 2017
Having bad or no credit can come back to haunt us, as credit scores seem to dictate many of our financial decisions such as buying a house, buying a new car, or even getting a credit card. Building your credit up from nothing can be a significant hurdle to overcome, so we at Summerside Toyota want to show you our strategy on how to get a car loan with no credit so you can build credit and get a new vehicle.
The first step is to start saving. Build up enough savings that you can comfortably have a large down payment to put on a new vehicle. The larger your down payment, the more likely a lender is to give you a loan, and the smaller your monthly payments will be. Putting a large down payment on a new vehicle is a great way of showing dealerships that you’re serious about building your credit score and getting that new car loan.
What do I need to get approved for a car loan?
Once you’ve got that down payment for a new car all saved up, the next step is to get pre-approved for a car loan. It’ll be a lot less intimidating if you come prepared, and you’ll also learn a lot more. You’ll need to take with you three documents to prove that you’re financially responsible and able to afford the monthly car loan payments. The first document should be a bank statement, to show your financial history. From there you’ll need something that demonstrates your ability to pay bills on time (like a phone or utilities bill) and proof of employment such as a recent pay stub. You’ll need to have all these documents with you to get pre-approved for a car loan and ultimately start establishing your credit.
Get a co-signer
We know, it sucks to have to ask Mom and Dad for a favour once you’re out on your own, but sometimes you need a co-signer to help you get that car loan and start building your credit. A co-signer is someone who is financially responsible and has good credit of their own who can help you take on the responsibility of a loan. Essentially, if you can’t make a payment, the responsibility for the loan falls on them, so choose your co-signer wisely and always ensure you can make your monthly payments.
In short, save up for a large down payment, have all the necessary documentation, and find a responsible co-signer and you will be ready to get pre-approved for a car loan to start building up that credit score. Follow these tips and you’ll be driving around in your new car from Summerside Toyota in no time.