auto

Getting a car loan with no credit history

Tara Baukus MelloQuestionDear Driving for Dollars,
In the past, I've financed two cars and paid off $30,000 in student loans, but I haven't needed or used credit in more than 10 years. How do I get a car loan now?
-- Kay

AnswerDear Kay,
Good for you for living debt-free! Unfortunately, you've put yourself in a jam now that you need a car loan and don't have any recent credit history. Right now, getting a loan with a good interest rate will be a challenge unless you get a co-signer. If you do use a co-signer, do so only with the full understanding of the ownership and financial responsibilities of you and the co-signer.

FYI, the dangers of co-signing are much greater for the co-signer because it is his or her good credit that could be damaged if payments are missed.

You can start to re-establish credit by getting a credit card, paying it off every month and gradually increasing your spending limit. This will take awhile. If you own a home that you have equity in, you can see about getting a line of credit and using that to purchase a car. You might also look for a friend who would be willing to float you a personal loan at a competitive rate.

Ask the adviser

If you have a car question, e-mail it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

News alert Create a news alert for "auto"

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CAR & MONEY NEWSLETTER

Get cost-cutting tips for buying, selling and maintaining your wheels. Delivered monthly.

advertisement
Partner Center
advertisement

Blog

Tara Baukus Mello

Cheap gas boosts holiday travel

With gas prices at the lowest they have been for Thanksgiving in five years, holiday travel this year will be up significantly, says AAA.  ... Read more


Connect with us