How to Buy a Car With No Credit

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By PaulF
User-Submitted Article

Article Rating: (5 Ratings)

Sometimes life throws you a few unexpected curve balls that can have a negative affect on you credit rating. When this happens, the prospect of buying a new car can seem virtually impossible to accomplish. However, your credit rating does not have to hinder you from buying a car. Here are a few steps you can follow to get over this hump and buy a car with no credit.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Limited Power of Attorney form
Assignment Agreement
Credit Information Sheet
Insurance documents

Step 1

Check local publications for eager sellers. Car owners who are in dire straits or have negative equity on their car loans often post ads in auto trader magazines and local newspapers. You may even know someone in this situation who's looking to sell their vehicle fast. Be sure to consult the National Automobile Dealers Association (NADA) book concerning your prospective vehicle. If the payoff figure on a vehicle is greater than the retail value listed in this book, then you may
have located an eager seller.
Step 2

Contact the owners of each vehicle that interests you. The goal of this conversation is to discover if the owner is upside down or in a negative
equity position concerning their vehicle. In most cases the owner just wants to get what they owe on the vehicle so they can be relieved of their financial pressure.
Step 3

Meet the owner face-to-face. Be professional and treat it like a job interview. During this meeting you want to be upfront with the owner about past credit problems that pose a hindrance to your ability to get financing. At the same time, you want to present a Suggested Assignment Agreement to the owner and assure them of your financial ability to take over their payments. Provide details concerning length of current employment, proof of income, length of time spent at current
residence, etc.
Step 4

Seal the deal. Get the owner to commit to your offer to take over the payments. If they seem hesitant, then empathize with their fears and ask when the next payment is due. They'll become more flexible as the due date approaches and you can offer to make the payment for them or make two payments in advance.
Step 5

Complete the appropriate paperwork including Limited Power of Attorney, Assignment Agreement, Credit Information Sheet, and Insurance
documents.

Comments

exportguy said

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on 1/8/2008 Imagine if YOU were the person that agreed to let a person with sub-par credit take over your payments, and be responsible for YOUR CREDIT. If this person misses just ONE single credit, it could ruin years of due diligence on your part, just for doing things the wrong way. This is among the worst advice I have ever seen. Think about it - you are giving someone who has proven they cannot maintain a good credit profile (no matter the sorry excuse) and allow them to ruin yours. With no risk on their part, they can not only take your car, but destroy it. Nevertheless, it's required in MOST states that the original buyer insure the vehicle, so even with a power of attorney as stated, would still require the original owner to have insurance. This would be a double whammy should they not only ruin your credit, but kill someone, only to have them take all you have. For what?

dazcon5 said

on 1/2/2008 Most financial institutions expressly forbid owners from doing this. Some banks will let someone assume the loan but they will need to go through a credit check in order to assume the loan.