No Credit Score Auto Loan
With a Bad Credit Cosigner


A car buying question from John H. in Shrewsbury, Mass...
Having a hard time getting approved for a no credit score auto loan.


Okay so I went to look at a 2006 Chevy Impala LT, it has 77,000 on it and its selling for $8250, but I need a bad credit auto loan with TT&L included which puts it around $9200.

The dealership is having a very hard time approving me. There are a few problems though.

First off, I'm 19 years old and I have a credit score of 0. That's right I have no credit and I'm trying to buy a car. I only gross about a $1000 a month. So I asked my grandmother to co sign or co borrow for me. She agreed.

Here in lies problem number 2. Her credit is far less than perfect. She has a 580 for a score and her monthly income is around $2700. She also has a 30 year fixed mortgage. She pays around $800/month.

They won't approve me to save my life..they asked if I had another co borrower I could get, but I'm almost positive I don't have anyone else.

Please any info/help would be much appreciated. Thanks!


Answer:

Hi John,

As you well know, you have a few things working against you. In fact, you've got more than a few. The $1000 monthly income is a big killer these days...Most lenders are looking for a minimum of $1500 or better. This is especially important for a no credit score auto loan.

You would actually fall into a similar category as someone looking for a bad credit auto loan. These can be tricky and there are many variables involved.

This is not so much because you have bad credit, you don't, but you have no credit and very limited income which means your no credit score auto loan is very risky for a lender and if you were to find an approval without a solid cosigner, then the bank is going to want you to meet some pretty strict terms...i.e. big down and high interest.

I'm not sure how good the dealership you are working with is with bad credit/no credit auto loans, but from the little bit I know of your situation it doesn't sound like they are all that good.

Getting a no credit score auto loan with a bad credit cosigner approved oftentimes comes down to how strong the special finance departments relationship is with the lender.

They should have known from the start that this would not work. In fact, your grandmother as cosigner is probably not helping much except to bring additional monthly income to the table.

What I would have done as a dealer
In this situation, there are really three options I would have explored (assuming I knew all that I'd need to know about your situation)...

Number 1
If you have a nice sized down payment like 25-30%, then I would have tried to send your no credit auto loan through a local credit union.

Number 2
Get your grandmother approved by herself (which is easier than using her as a cosigner) to purchase the car for you (also known as a straw purchase) and some lenders allow this if they know what is going on.

Number 3
Get you approved first and then find a car for you that fits the approval. This is typically the best way to work a bad credit / no credit score auto loan. I have lenders that I use at my dealership that approve literally all credit.

Unfortunately, you being in Massachusetts means I can't help you directly.

Summary

I hate to tell you to give up on this car, but that may be what you'll have to do and start over.

I'd save up some money (or if possible borrow some now and maybe keep this deal alive with a nice sized down payment) and start over, but call around and explain your situation before getting your credit pulled and re-pulled.

In fact, you may want to get your credit score at CreditReport.com! to be sure that you have no negatives that are making this even more difficult (yes, you can have negative information reporting and still no credit score).

Clean up any negatives if they exist...That's a real killer if you've got only collections reporting and no positives.

Find a dealer that doesn't sound like they are blowing smoke and can actually help you get the no credit score auto loan you need.

The best source I know of to find local dealers that truly specialize in bad credit and no credit score auto loans is Auto Credit Express�, they've processed over 1 Million online bad credit loans (very big).

But again, they do look for a minimum of $1,500 income.

Justin


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