Do you need credit to get a car loan?
I want to get a car loan, but I’ve only had one credit card. I’ve read that most lenders want a lengthy credit history. How much credit do I need to get a car loan?
Having a credit card is the first step toward building credit, so good work on that. To get a car loan, you don’t need credit, but your options will be limited to specialized lenders and higher interest rates.
Before you worry about not having enough credit, grab a copy of your credit report to familiarize yourself with your credit score. This will help you shop around for loans, determine if you’re getting a good interest rate, and evaluate your chances of approval. The higher your credit score, the more likely a lender is to approve you.
Even if you have a good credit score, your lack of credit history may resign you to a limited number of lenders. Specialized lenders work directly with those who have no credit or limited credit. Alternatively, shop around for car loans at credit unions in your area. Credit unions are nonprofit organizations without shareholders, so they’re often more likely to work with someone in your situation.
Other ways to improve your chances of car loan approval with limited credit history include:
- Getting a cosigner
- Making a sizable down payment
- Having consistent, steady income
If you get approved for a car loan, you also need to budget for full coverage car insurance as required by all lenders. Just as you would with your car loan, make sure to shop around for car insurance with the Jerry app.
A licensed broker, Jerry helps you find and compare quotes from over 50 top providers like State Farm and Progressive. When you find the best rate, Jerry can help you buy your new coverage! It’s as simple as that.
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