Buying a Car with No Credit and No Cosigner

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - May 2, 2019

If you have bad credit or even no credit, many lenders are going to ask you for a cosigner in order to approve you for financing. Not everyone has one ready, though, so where do you turn when you need a car and you don’t have a cosigner?

Where to Buy a Car with No Credit

Traditional lenders, such as banks and credit unions, often turn down consumers with little to no credit, so where do you go from there if you can’t get a pre-approved auto loan? You can try a subprime lender or a buy here pay here (BHPH) dealer.

Subprime lenders specialize in handling unique credit situations, and can often offer financing to those with no credit history. These lenders typically only work through special finance dealerships, so finding one of them is how you get to them.

Subprime lenders do check your credit score, so you’re not off the hook there, but they base approvals on factors in addition to credit scores including income, employment, and residency. Some may require a cosigner, while others may not. It ultimately depends on the lender and the programs they offer.

If you’re turned down by a subprime lender because you have no credit and/or no cosigner, your next best option is to go to a buy here pay here dealer. These dealerships are also lenders, and finance their vehicles in-house. This means you can buy a car and get financed in the same place.

Buy here pay here dealers typically don’t run credit checks and base approvals on income and down payments, instead. The problem is, if you want to improve your credit, taking out one of these auto loans isn’t always going to help you since some BHPH dealerships don’t report on-time payments or loans to the credit bureaus.

Getting Approved for a Car Loan with No Cosigner

If you have credit and it isn’t in the best shape, but you don’t have a cosigner to help you out, how can you get car financing? There are three alternatives you could consider:

  1. Choose an affordable vehicle – One way to increase your chances of getting approved with no cosigner is to pick a reasonably priced car. Think of the basics you need, and don’t go for something flashy or fully equipped with accessories. Lenders are more likely to approve you if you keep your vehicle choice simple – plus you save money.
  2. Make a bigger down payment – Making a larger down payment, such as close to 20 percent of the selling price, often improves your chances of approval, which can convince the lender that you don’t need a cosigner. If you do this, not only can you avoid needing a cosigner, but you save money on the overall cost of the loan.
  3. Wait until your credit improves – If you don’t need a car right now and you can take extra time to boost your credit, you should. This is probably your best bet if you want a better deal on an auto loan, but waiting isn’t always an option.

Need Help Finding Financing?

If you’re stuck searching for a lender to work with because you have no credit and no cosigner, we want to help. At CarsDirect, we can match you with a local special finance dealer for free.

We are teamed up with dealerships all over the country that are experts in special financing. Get started by submitting our secure auto loan request form, and we'll get to work on your behalf.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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