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When you go to a dealer for a new car, chances are your salesman will try to find you a loan using his system. However, you might be able to get a loan from your bank at a better interest rate. If you bank at a credit union, your odds are higher of getting a loan because these institutions are smaller and more willing to work with you personally. You may also be able to get a loan with a credit union even if you don't bank there. Consider the website Peer to Peer, where you can get a loan from an individual instead of an institution. Consider borrowing money from a relative. Find someone who has good credit amongst your friends and family to co-sign on your car loan. This will boost a lender's confidence in the loan. Make sure it is someone who trusts you, because the record of this loan goes on both your credit reports. If you ever default on this loan, the lender will look to the co-signer for payment, making your relationship very uncomfortable. If you are offered a loan, make sure it has a low enough interest rate to keep your monthly payments low. For example, someone with a mid-range credit score (620-680) is looking at an interest rate of between 5 and 6%. A credit score lower than that is looking at an interest rate anywhere from 6.5 to 13%. Although monthly payments might be higher, getting a loan for a shorter amount of time means paying less interest in the long run. If you can handle it financially, try to get a loan for four years or less. Some lenders and car lots will give you discounts based on things you have done and memberships you have. If you qualify for a discount of any kind, bring the paperwork for it. Some places (both dealerships and lenders) will offer discounts for being a student, a recent graduate, being in the military, or being a first-time buyer. All of these discounts tend to come with strict requirements. For example, the first-time buyer discount may require 10% down, references, a steady job, and car insurance. You may be able to get a lower monthly payment if you lease instead of buy. If you are jobless when you start the car search and no lenders will take you, consider pausing the search until you have worked steadily for several months. This will build your reputation as a responsible citizen. Be sure to bring in proof of employment when you resume the search. Also consider doing things to boost your credit while you wait, such as getting a credit card. Ultimately, the easiest way to buy a car without any credit is to pay cash for the entire vehicle. This practice is wise because it keeps you from going into debt and defaulting on loans, but it is also risky because it means you will continue to have an empty credit history. Car dealers who receive $10,000 or more in cash are required to report the transaction and its specifics to the IRS.
Find loans on your own. Seek out a co-signer. Make sure your loan has a low APR. Try to get a loan with a shorter term. Look into getting discounts. Revisit the loan in a few months. Pay cash in full.