Expected APR for person with no credit



Hello I’m looking into buying a new car and was wondering, generally, around how much APR will I be looking at having no credit (not bad, not good, just none) I’m pretty new to this and trying to make sense of everything.

Any other tips for someone buying a new car for the fist time?



Everyone has a credit report on themselves even if they are not aware of it. You are about to find this out.

No one can predict what lenders will charge you for interest. All you can do is fill out the forms and wait to see what they come back with. Be aware you need not finance through a dealer. If you do you are likely to get gouged. Go to your bank or credit union and apply for a loan there. You should do much better interestwise.


there are so many other topics considered in financing that the APR is a small tick in the larger cog of tocks concerning financing.

you should go to {url] https://www.annualcreditreport.com/cra/index.jsp go through the sign in steps and get a credit report.

make sure the loans, credit cards you have, and other real info is correct.

i was surprised at a false loan i had on mine.

getting this corrected is important to getting good credit/ financing.

as others have said, the dealer will skew the numbers, making it appear that you are getting a good financing APR, but when you look into it further, you wiil find they have gotten an extra half percent or so. your regular bank is a better shot at good financing


Well, you’re wading into a minefield for sure.
About all I can suggest is do your homework on the car you want first and try to line this up in advance with a bank or credit union. You do not want to let the dealer handle the financing for you.

The reason for keeping the dealers out of the financing end of things is that they know that 98% of the customers out there are concerned with one thing only and that is the monthly payment. Total price, APR, or whatever is irrelevant in their minds so the dealer concentrates on the monthly amount and this leads to the customer paying more than they should.

It is also helpful if you have a down payment or trade-in. With most new cars you’re going to take a pretty heavy hit on depreciation the first few years so make sure it’s a vehicle you really want and plan on keeping for a while. Hope those few comments help.


Thanks these comments have been great. I’m thinking at this point I should first talk to the bank. I’m looking at the 08 Ford Ranger XL with basic options and would definitely make as big a down payment as I can if that helps the monthly payment and/or APR. My concern is what will the bank or dealer say about my credit. I havn’t had any credit cards or loans or anything. I use Visa prepaid credit card (just put cash on it whenever I need to use it) and prepaid cellphone (buy phone card with cash when I need it) Should I fill out the online credit application before going to the bank? I know I’ve heard you want to do that before you try to get financed by the dealer (so they don’t try to tell you your credit score is lower then what it really is) but would that be the same for the bank too? I’ll keep researching, thanks a lot for the help. Any other suggestions would be greatly appreciated!


Well being a former banker, with No credit, you will need to get a co-signer to help you out. Someone with good credit who will ensure that you repay the loan. Parents, friends, etc. Once you make all the payments on time, then your next purchase might not need a co-signer. Also someone with good credit will also help you get the loan and a low interest rate or APR.


I had the problem of not having any credit when I got my last car(used 95 contour). I didn’t trade anything in, but I did put a considerable amount of money down(about $2500 iirc) and did not need a cosigner when I financed through the dealership. I don’t remember my interest offhand, but I think it was something like 9.5%


Congratulations on having no credit, that means you are smart enough not to borrow money. If you have enough cash to make a big down payment on a '08, why don’t you just pay cash for a car that you can afford without borrowing? Buying a new car is a horrible deal due to the initial depreciation, just find a good late model used car and pay cash. Put the equivalent of your new car payment in the bank and start saving for your next car. You only need credit if you don’t have money.


Can you delay? Buy somthing you need on credit or credit card even if you have cash. You establish credit. Instead of using prepaid credit card you can prepay a regular credit card by simply sending a payment via mail giving your card an egative balance. I do this when traveling abroad for cash advances(ATM) since they cannot charge interest for them if balance is negative.

Price banks, credit union and the dealer for loan. Dealer can tack on up to 3% of interest legally as profit. They will see as prime target at dealer since a customer like you with poorer credit is a target for more profit.

Have you thought of buying slightly used. This truck has terrible(bottom barrel) depreciation making in a relative bargain slightly used. My credit union offers same rates new as as used up to 3yrs/60k miles.


when i just got married, i couldn’t get an american express card. i was traveling alot, and being just out of high school, i had no credit history also.

my mother suggested i go to the bank and get a 3,000 personal loan. (i had almost 4ooo in the bank.) they thought i was a little crazy, but they gave me a 3,000 loan. i think the loan was for a 3 or 4 year term. i paid the loan off in 4 or 5 months. shortly after i paid the loan off, i started getting credit card offers in the mail. i guess that seeing my loan, opening, paying, then paying it off was attractive to get credit.

also, i suggested getting your credit report earlier. the reason you should get that is to check for errors, and to make sure no one else has gotten your personal info, and taken loans out in your name. it really stinks when you go for a loan, and have either a high interest rate, or can’t even get a loan, due to bad credit. ensure that you really have NO credit, and not BAD credit.

you do have some credit, since you pay telephone bills, electric bills, etc.


Do you have a bank where you do regular business (checking and/or savings account)? That’s the best place to start. Even without a proper credit history, a bank that has a positive relationship with you is going to be far more inclined to pre-approve a car loan with a reasonable interest rate. My wife was recently in a situation like yours… because all of our finances are in my name, and she’s never had anything to report on her credit report. So, when she went to buy her first car, intending to have the entire transaction under her name, the bank the dealer works with balked, and wouldn’t approve the sale without me as a co-signer. Not because she had bad credit, but simply because she had no credit. Her bank, however, was more than willing to approve the loan, based on her solid history with them (always carried a balance in her savings account and checking account, and has never overdrawn). Your personal bank will also almost always (emphasis on almost) offer a better interest rate than the dealer.

As far as the dealer or bank lowballing your credit score, you can always check your report for free (at all three credit reporting agencies) once a year at www.annualcreditreport.com and for a small fee you can get your credit score as well (just don’t get tricked into signing up for additional products/services).


The more you put down on the vehicle, the better the interest will be. One thing that is different about a car loan over other consumer loans is the time that you will be “upside down” with the loan, that is you will owe more money than the vehicle is worth. That is not only a problem with defaults, but if the vehicle is totaled in an accident, the insurance pay out won’t cover the loan. Sometimes you have to get additional loan insurance which is sold as a percent of balance.

The greater your down payment, the shorter the time you will be upside down. If your parents are willing to co-sign, that will be a big help also.


Buying a big ticket item on credit can help establish a credit rating in case MindBrain wants to buy a house a few years from now. I agree that loans for things that depreciate are a bad idea, but in this case it can have a good long term use.

MindBrain, I suggest that you consider a used 2005-2007 Ranger XL. The rate will be higher than a new truck, but the lower cost can reduce the monthly payment or length of the loan. I’d opt for the same monthly payment and a shorter term. This will double your work load - you need to shop for a loan and for a suitable truck. Do your homework well in both areas and you have a better chance of success.