How To Get A Car Loan With Bad Credit Or No Credit!

hey everyone it's Ben Hardy here and in

today's video we're gonna be talking

about people that are a first-time buyer

with a car or they just don't have any

credit history so they're also

first-time buyer but I'm going to get

into these two situations and what I

mean by first-time buyers someone that

has credit but has never had an auto

loan before and then obviously talking

about people that just don't have any

credit history at all and I'll first

answer the question of if you can get a

loan yes you can get an auto loan and

I'll kind of give my advice on all that

throughout the video but in the first

part I'm going to talk about people to

have no credit history at all in kind of

that whole situation and then in the

second part I'm going to talk about

people that do have credit history but

they've never had an auto loan and then

we're going to wrap things up with any

leftover parts or tips and advice that

kind of can go over both parties so

let's get into the video a quick

disclaimer is there's a lot of things

that are super similar between a first

time car buyer and a ghost and so

there's some things that I'm going to

kind of meld together at the end of this

video so in this part I'm basically just

gonna describe what a ghost is and a lot

of stipulations that will kind of apply

to them when they are getting a loan

just someone who has no credit history

so first off a ghost like I said if

someone who has no credit history at all

and that's what lenders and dealerships

will call it is a ghost because you

don't exist right from a credit

standpoint and it's a negative thing

from the sense that they have nothing to

base you off of so they don't know if

they can trust you for a loan it's a

positive thing because you haven't had a

chance to screw up yet on a credit

standpoint so you don't have any

negative things going against you that

being said though there are a ton of

stipulations from lenders for ghosts

typically now what it usually is is the

car has to be a new enough vehicle

that's one of the stipulations for most

lenders I had lenders that would maybe

go into ten years

some lenders would only go out to seven

years old someone do five someone will

we do three years old so just depending

on the particular lender they're always

going to set a range and the reason

they're doing that is they're thinking

that if you buy a newer car the chances

of something breaking down on it are

gonna be less so then you're gonna make

your car payment because you're not

going to not make your car payment

because you have to fix your car and all

that kind of stuff right they

they look at that right the next thing

is mileage lenders will typically have

mileage restrictions for people to have

no credit when they are getting their

first auto loan usually they want it to

be under a hundred thousand miles at

least some lenders are even stricter

where they're like you can't have above

forty thousand miles I've seen it so

just figure out that program with a

particular lender as well and understand

that you're gonna have to buy a newer

car that's lower miles which sounds nice

but the next part kind of makes things

difficult they have money restrictions

on it and the first one is going to be

pretty obvious it's just based on your

income most lenders again it's varies

lender lender will have a percentage

based that they will loan you out in

terms of a monthly obligation or a

monthly payment on your income so some

letters will only do 5% some will go up

to 10% some will even go up to 15% of

your monthly income and this is gross

monthly income by the way in terms of a

car payment now that means that if you

for example only make $1,000 a month

well just take let's say 10% of $1,000 a

month that means you can only afford

$100 a month car payment or if they go

up to 15% you can only afford $150 a

month car payment so understand that if

your income is extremely low it can be

pretty difficult to just get an auto

loan because it's hard to find cars that

have a payment that is that low that

fall under all the other criteria and

then the next thing is just gonna do the

actual money amount now sometimes there

are circumstances where if someone has a

really high income and they've got a lot

of money down lenders will kind of be

flexible but for the most part they

don't want to loan you out more than

$15,000 and a lot of lenders it'll be

even less than that when I was a

first-time buyer now this is going to be

more on the second section because I did

have some credit history I was able to

get a loan of about $15,000 for my first

auto loan and that's what I've seen

typically be the top for most people to

have absolutely no credit history at all

most some will be even less they'll be

10 to 12 thousand dollars and some of

them they won't even go above $6,000 for

an auto loan so you can see how that can

make things extremely difficult for you

for finding a car because you're like

okay I have to find a car that is new


has low enough miles and it's

inexpensive enough that I can get a loan

on it and it can basically dwindle down

your options to a very select amount of

cars so it can make things difficult if

you have no credit history so those are

typically these stipulations for a ghost

and then obviously the last thing is

some letters will require money down and

this can vary lender to lender

some of them they'll say you don't need

any money down some of them say you need

20% down it just depends on the

particular lender so understand that you

might have to come with money out of

pocket to get the auto loan now this

next section is going to be on people

that are first time car buyers and what

I mean is someone that has never had an

auto loan before however they do have

credit history and there's a very wide

spectrum of people that fall under this

category starting from someone in my

situation years in the past where I had

a bunch of credit cards that I had used

or I shouldn't say a bunch I had one

credit card that I had used every single

month so I actually had a really high

credit score but my credit history was

very thin and so I still had a credit

score when I got my auto loan but

because when I got my first auto loan I

was considered a first-time buyer I had

a limit on that auto loan the maximum

amount they would loan me out was

$15,000 and I needed to actually find a

car that was less than a hundred

thousand miles they didn't give me a

year restriction the lender that I went

through at that time didn't have a year

restriction which I thought was pretty

cool so I ended up getting a little bit

of an older car but yeah there

definitely are restrictions for

first-time buyers but it depends on the


so the first situation is someone who

has never had an auto loan obviously and

that's gonna be all these people but who

has really bad credit this is the

hardest probably in terms of a just

credit approval situation to get done

because one you haven't proven to a

lender that you can make payments on a

car and then two you have proven to a

lender that you're not good at making

payments on other things and so from

their viewpoint they don't really want

to loan you out money because then they

go this person's high at risk they're

gonna default on our car payment we're

gonna have to repo it we're possibly

going to lose money all that kind of

stuff right

that's what they're thinking and so

that's kind of like the first part of

these spectrums people have bad credit

if you're in this spectrum where you'd

never have had an auto loan and you have

bad credit history prepare for a couple

things typically you will need to come

with a lot of proof of income just to

get approved on something like this

money down is definitely going to be a

thing and potentially you're gonna need

to have a cosigner as well that actually

has good credit just that you can get a

proof for an auto loan and the

restrictions are gonna be super strict

typically people that are like this they

will make it so that it's a very strict

money amount mileage amount year for the

car all that kind of stuff like

everything I've talked about in the

first part of the video but kind of even

stricter then the next year is like I

said what I was where I never had

basically an auto loan but I had good

credit and in this situation you have a

pretty good chance of getting approved

by yourself but typically you're still

gonna have to bring proof of income when

you try to get approved for the auto

loan money down is not necessarily going

to be a hundred percent but typically

they'll still want some form of money

down it just won't be as much as someone

with bad credit and the nice thing is

you can actually get a pretty good

interest rate so my first interest rate

ever on an auto loan was three point

four nine percent for sixty months which

I mean for someone who has never had an

auto loan before that's a really good

interest rate so if you actually are

smart and build up your credit history

even if you don't have a mortgage or an

auto loan to build it you can solve a

chance of getting a pretty low interest

rate if you're smart about things so

that's kind of like that part of the

spectrum you're still going to be pretty

limited in terms of how much money you

can get loaned out to you it's still

probably going to be in that same

first-time buyers area where they'll

probably only loan you up to $15,000 so

just kind of understand that and yep

pretty simple there now the next step is

someone who has credit history has never

had an auto loan but they have like a

pretty deep credit history and this is

typically someone who has multiple

credit cards they have a mortgage which

believe it or not there's a lot of

people out there actually that have a

but they've never had an auto loan I saw

it happen all the time

and this is a very interesting

first-time buyer because they are a

first-time buyer but they're not at the

same time and so sometimes lenders will

be a little bit more lacks with these

situations especially if you have a good

credit score and they will allow you to

take out a bigger loan than they

normally would for a first-time buyer I

had a situation where I had a customer

come in that's I mean income was good

credit was good and they had a mortgage

but they never had an auto loan and we

were able to get them approved for a

$50,000 vehicle because everything

matched up even though they had never

had an auto loan before and they passed

and this was just because the lender

looked at it from okay this person has a

steady job with steady income and

they're paying on this mortgage they've

never missed a payment they're right

they look at all that kind of stuff and

they go okay this person's chance of

missing a car payment is gonna be very


so we're okay with loaning them out more

money we understand why they're trying

to take that step in their life and I

guess that'll lead into the next part of

the video once you talk about things

that will apply to both people that

don't have credit and people that do

have credit that are first-time car loan

buyers now I have mentioned some of

these in the video but I just want to

reiterate a few of them and then add

some new pointers now like I said

throughout the video typically they will

expect money downed and that's just

across the board certain situations you

might not have to but understand that

you should probably budget that if

you're planning on buying a car you've

never had a car loan before just at

least put that aside and I kind of

mentioned that in my other video anyways

that it's good to have money down

regardless and then obviously they're

gonna expect just more stuff from you

typically stuff like proof of income

proof of residency all that kind of

stuff proof of employment even all just

everything you're gonna have to do quite

a bit more leg room leg room leg work

just to get the loan done so just

understand that it might be a little bit

difficult on that side of things and it

might take you a little bit longer now I

guess the biggest thing that I would say

that applies to all of this other than

the stuff that I've already mentioned

with like the mileage restriction the

year restriction all that is coming to

this with a mentality that you cannot be


the car now I'm not saying that you

should just buy any car that you see or

you should buy the first car that you

see here buy a piece of junk

what I am saying though is you need to

be open-minded and not look at this

first car purchase as like your only car

purchase I think that's a struggle with

a lot of first-time buyers in something

I personally struggled with as well and

it's coming into this and I'm going okay

well I'm spending X amount of dollars I

need to get the coolest car possible

whatever because if I'm gonna spend this

money it better be something that's

worthwhile and when you're someone who

doesn't have any credit history at all

or you have very thin credit you have to

build it some way and having an auto

loan is one of the best ways to build

your credit if you're smart about it and

so you just can't be picky the analogy

that I used to always use with customers

is that this first auto loan is kind of

like dating right you have to date a few

people before you marry someone some

people do end up marrying the first

person that they date but chances are

that's not gonna happen you're gonna

have to date a few people right you're

gonna probably have to own a few cars

before you find your dream car or before

you're able to afford your dream car so

you need to look at that from an auto

loan perspective as well

they always say what you got to crash a

few clunkers before you drive that

Ferrari you have to take out a few auto

loans on cars that you might not love

before you can get an auto loan on a car

that you truly love for me this was

buying a $20,000 car and taking out a

loan of about 15 grand for it showing

the lender that I'm really good at

paying that I pretty much paid that off

and so then that showed lenders that I

was committed to paying on loans so then

I was able to in the next year buy one

of my dream cars which was a Shelby

gt350 and actually months prior to that

I was able to lease a truck which I'd

always wanted truck and that was a 20-18

ram 1500 and so I went from being

someone that had just basically a credit

card as credit history to one auto loan

and that one auto loan because I paid on

it very well and because it showed

lenders I was committed to and came with

a lot of money down I then was able to

get vehicles that I really loved so I

had a vehicle that I liked but I didn't


which then led me into getting vehicles

that I really love and obviously that's

now led me to where I am now where I can

get a loan on a 2019 Ram rebel which I

thought was a coolest truck ever and now

this 2020 Ford Raptor and my situation

is a little bit different now where I

don't get auto loans because I need the

money from the lender I get it so that I

can invest my money but again that's a

video for a whole nother topic but just

kind of I hope that my progression with

cars can show you guys that you need to

just be open-minded to vehicles and just

understand that that's not your end-all

be-all car and you just need to be open

to options and maybe you're gonna have

to drive a car that you don't really

love for a year or two and then you can

get a car that you really love that is

going to sum up things for my video on

first-time buyers and people that don't

have any credit if you guys have any

questions obviously leave that in the

comment section below and other than

that if you're stopping for the first

time please subscribe I will see all of

you in that next video