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How hard is it to get a car loan if I have a limited credit history?
I've only had a credit card for about a year, but I want to get a car loan. Will this be difficult to get with limited credit history?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You have a few options to get a loan with limited credit history:
- Get a cosigner
Because you have limited credit, lenders have trouble assessing your risk. Some may eliminate you from contention right off the bat, while others may simply charge you exorbitant interest rates to make up for the risk.
A cosigner can help you qualify for a loan because that person guarantees to make sure the car loan is paid, even if you are unable or unwilling to pay it. A good cosigner has a steady income, good credit, and a decent debt-to-income ratio.
Keep in mind that you also need to budget for car insurance for your new car. Lenders will require full coverage car insurance, which can be pricey, so use the
Jerry
app to help you find good deals. Jerry compares personalized rates from more than 50 top providers, including Nationwide, Allstate, and Travelers, and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!View full answer
- Gregory R.
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