Having little to no credit can be tricky when it comes to car buying. You have three options:
- Get a co-signer (this will probably be one of your parents/guardians)
- Build your credit score
- Get a First-Time Auto Loan
While the first option may look like the easy way out, it is very high risk and has very little reward; you will be placing most of the burden on the co-signer. They will be taking full responsibility and face all consequences if you default, meaning that you fail to make the payments, on the loan.
The sooner you start buliding your credit, you not only open up the opportunity to purchase a car, but a house, a vacation, and other large purchases too.
Building good credit takes time. Here are some tips:
- For those with no credit, get a secured credit card. This card is based on the deposit you provide, and serves as your credit limit
- Make payments on time.
- Keep your balances low and pay them off in full each time.
- Don't apply for too many credit cards at once
- Keep your accounts open as long as possible
Give yourself at least six months to establish and/or build credit, and you could be one step closer to owning a car.
Lastly, you could apply for a First-Time Car Buyer Loan, which allows individuals to qualify for a loan with little or no credit. Since credit score is not taken into consideration for this loan, there is more emphasis on income as well as your down payment. With this option, you won't need to put a co-signer at risk and you'll be able to build your credit score!