[G]etting approved for a loan of any kind with no credit history is rather difficult. Lenders seldom want to be the one to take the chance and offer credit to an unknown. However, it is possible to be approved for a car loan even if you have limited credit. Since this kind of loan uses the car as collateral, it may be easier to qualify for than other types of loans.
What Not to Do
The first mistake that many people make is going to a dealership and letting them try to find credit options for you. The problem with this method is that they may run your credit numerous times trying to find a lender. These inquiries can hurt your credit even further. Plus, you may receive approval at a higher rate because of the lack of a credit history.
This method is actually the easier way of getting approval because you don’t have to do the work. However, you lose some control over the terms in your loan.
Start Local
Begin with your local bank or credit union to see if you can get approved. Someone who knows you may be more willing to take a chance on you. Instead of filling out an online application, consider trying for an in-person appointment.
Bring in your paystubs and other financial information. Be prepared to present your case as to why a lender should approve you for a loan. While lenders must follow guidelines and regulations, they do have some leniency in approving a loan application if they can make a case for you.
Show how you can fit the payments in your budget. If you have been putting money in savings and not using all of your income this will help with approval.