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How do you get a car loan with limited credit history?
What do I need to do to get a car loan with limited credit history? My overall score is pretty good, but I just have one credit card that I’ve been using for about a year. What kind of options do I have?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It’s great that you have a good credit score!
There are a few things you can do to increase your chances of getting approved for a car loan, even if you have limited credit history:
- Find a cosigner. If you’re worried that your credit history could prevent you from getting the car you want, you can find someone with excellent credit to cosign on your loan.
- Make a largedownpayment. When you’re willing to put a lot of money down, lenders will often offer you better terms. If you can, save up for a bigger downpayment before signing the loan contract.
- Have an income source. Most lenders will require you to prove that you have a steady income source. If you can show that you receive paychecks regularly, lenders will be much more likely to approve your loan application.
- Shop around. Some lenders specialize in loans for people with limited to no credit history. You could also check your local credit unions, as these institutions tend to offer more favorable terms to borrowers with limited credit. Regardless, get quotes from multiple lenders so that you can compare rates and terms before settling on a loan.
You’ll also need to shop around when you pick an insurance provider for your new car. Luckily, you can do that and more with
Jerry
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