Best option for no-credit used car finance?
I'm 23 and have no credit. I can't get anything but a secured credit card which does nothing for your credit score. I live at home rent-free and have a stable job, so I figure now is a good time to have a monthly payment. I know I'm going to get hosed a little bit on interest rates, but I don't see any appealing alternatives for getting a reliable car and establishing credit at the same time. But I don't want to keep applying for loans at dealers and being denied, as other lenders see these multiple inquiries as negatives. What should I do?
Public Comments
- First of all, to recommend a large franchise dealer, Toyota has a really great first time buyer program. Do you have a bank? If so, try them first. A quick way to get your score to rise is by doing a secured loan. Save up $500 or $1000 and take it to your bank and say you would like to do a secured loan. What it actually is, is taking out a loan against your current $500 or $1000 in the same amount. Basically they deposit your now $1000 or $2000 into your account and don't let you touch it and it pays itself off, giving you installment debt history on your credit bureau.
- If you are determined to finance a car to rebuild your credit then you will need to start at one of those "BUY HERE--PAY HERE" car lots and that's no guarantee that they will report it to the credit bureau's, a better plan of attack is to ask your friends what they pay a month for their cars and and get an average, then each month put double that amount in a savings account and at the end of 2 years you can go pay cash for a nice car
- If you have a good job and no BAD credit, you might try a personal loan. When you apply for a loan, ask them to give you a hypothetical answer before running a credit check, and before applying: Ask them to make a hypothetical decision based on what you would like to buy, your down payment(if any), your income, your credit status (none), and your expenses(I suppose none). If they tell you that based on what you told them, you would qualify, then go ahead and apply. If they won't do that, and they tell you you must formally apply in order to find out if you qualify, walk out the door and try someone else.
