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Columns: Driving for Dollars
Terry Jackson   Expert: Terry Jackson
Driving for Dollars
Move aids buyers without credit history
Driving for Dollars

Big down payment may lower loan rate

Dear Terry,
I was thinking about buying a new car next year. I have a job and some money saved up, but I have no credit. As a result of having no credit, will I get a low interest rate or high interest rate?
-- First car buyer

Dear First,
It's an unfortunate Catch-22 of the credit business that the two types of people who suffer low credit scores are those who have abused their credit and those who have never had credit.

Because you have no credit history -- and lenders have no basis on which to judge whether you will faithfully pay them -- you're not likely to get an offer with a low interest rate.

But you can help lower the interest rate by making a substantial down payment, which shows the lender you have more at stake in the deal and may be less likely to default on the vehicle.

Here are this week's reader questions:
My 10 favorite cars for today's shopper
Will scant credit history affect my loan rate?
Should I buy my lease car?
Can we be sued after co-signing?
Bankrate.com's corrections policy -- Posted: Sept. 5, 2008
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