How to Get a Bad Credit Car Loan without a Cosigner

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Even with poor credit.

By

Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


, Contributing Writer - September 25, 2018

If you have bad credit or no credit, a cosigner can help you get approved for an auto loan. But what if you don't have somebody who can cosign for you, or you’d rather get a car loan without a cosigner? In both cases, there are options car buyers can explore to get a bad credit car loan without a cosigner.

Bad Credit Car Loans with No Cosigner

A cosigner signs the loan alongside a primary borrower, which legally makes them part of the loan agreement. This means the cosigner is responsible for paying in the event a primary borrower doesn't or is unable to. A cosigner typically needs to have good credit, which is another reason why lenders may ask somebody with bad credit to have one.

But if you want to get a car loan with no cosigner, here are a few ways you can try to get approved without one:

  • Work with a Special Finance Dealership – Most lenders, like big-time banks and credit unions, automatically turn down borrowers with bad credit, so getting approved without a cosigner is even less likely. However, special finance dealerships that are signed up with subprime lenders put less of an emphasis on your credit score. These lenders rely on other factors like your income, residence, and employment to give them the ability to move forward with the financing process. They have loan programs in place specifically designed for borrowers with bad credit, making it more realistic to get approved without a cosigner.
  • Make a Bigger Down Payment – A down payment reduces the amount you're asking to borrow, which certainly helps your shot at an approval. Putting enough money down may be just the thing to convince a lender to approve you without a cosigner. A small down payment is typically required in the first place on a bad credit auto loan, but a larger down payment also helps you save money in the long run. Putting money down lowers your monthly payment and reduces the interest charges you pay.
  • Choose a More Affordable Vehicle – Another thing you can do to improve your chances of approval without a cosigner is to pick an affordable car. Just like how a down payment lowers the amount you need to borrow, choosing a less expensive vehicle makes a lender more likely to give you the green light. If you stick to the basics and choose a vehicle that comfortably fits your budget, you're setting yourself up for success with your bad credit car loan. This makes it easier for you to make all of your payments on time so you can use the loan to raise your credit score.
  • Wait and Improve Credit – For some, their only option for buying a car with bad credit and no cosigner is to wait. Take some time to work on improving your credit before applying for a car loan to give you a better chance at an approval. You can work on establishing a strong payment history with a credit card or two. If you don’t have one, a secured credit card is often easier to qualify for, though they require a deposit to open. You can reduce your credit card balances, catch up on any late payments, and check your credit reports for any inaccurate information that you can dispute in order to raise your credit score, as well.

These tips can help your chances of getting approved for a bad credit car loan without a cosigner. Even if you were to follow these tips, a lender may still require you to have one in some cases. In this event, there's one other option to explore to get a car loan without a cosigner.

No Credit No Cosigner Car Dealerships

For car buyers who don't have time to wait and improve their credit, another option to explore is in-house financing. Auto dealerships that finance loans in house are often referred to as buy here pay here (BHPH) dealers or no credit no cosigner car dealerships. The reason why is because these places finance vehicles on their own and don't use outside lenders, so they typically won't do a credit check.

BHPH car dealers aren't concerned with how your credit history looks, or if you even have one in the first place. For this reason, you typically aren't required to have a cosigner to boost your credit in order to get financed. Instead, they base approvals on your income, so what you make compared to your monthly bills determines how much of a loan you can get.

There are still a few downsides to getting financed with a no credit no cosigner car dealership. To start, your car choice is limited to used vehicles and what's available on the lot at that time, and you may be required to make your payments in person at the dealer. Also, it's not a given that these dealerships report your payments to credit bureaus. If they don't, this means your loan won't help you improve your credit the way one through a subprime lender can. Make sure to ask about a BHPH dealer's reporting practices before signing anything if credit improvement is your goal.

The Bottom Line

Getting a bad credit car loan without a cosigner is more possible if you remember the tips you can use to improve your chances of an approval, but first you need to make sure you're working with the right dealership.

CarsDirect can match you with a local special finance dealer for free. We work with dealerships across the country that specialize in helping car buyers dealing with less than perfect credit. Start the process right now by submitting our secure auto loan request form, and we'll get to work on your behalf.

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, Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


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