No Credit History? You Can Still Get a Car Loan

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Updated · 1 min read
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Written by Erin El Issa
Senior Writer
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Edited by Kathy Hinson
Lead Assigning Editor
 
Fact Checked

Buying a car with no credit: Is it possible?

Yes, there are ways you can buy a car without a well-established credit score, but having no credit history makes it much more difficult.

» MORE: What credit score do you need to buy a car?

When getting approved for a car loan, lenders take into account your credit score as an indication of your ability to make your payments. If you don’t have an established credit history, you’ll probably be viewed as a riskier candidate for a loan, and you'll pay much higher interest rates than someone who has a long history of on-time payments.

» MORE: How to get a car loan with bad credit

Car-buying options

There are a few options for buying a car with no credit history:

  • Ask someone to co-sign. You’re more likely to drive away with a loan if you have a co-signer with good credit. In co-signing, someone agrees to add their name to your car loan. The co-signer is thus taking on the responsibility of being equally on the hook for payments in the event that you don’t pay them on time.

  • Increase your down payment. The likelihood of getting approved for a loan depends on the size of the loan. If you make a larger down payment, you may have a greater chance of getting approved for the now-reduced loan amount.

  • Find the loan for you. Depending on your current situation, you may have expanded options. Some lenders, for example, offer loans to students who are still in school and don’t have any credit history. Check for such specialized accommodations that may apply to you.

» COMPARE: Bad-credit auto loans

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Credit-building options

Getting a loan on your new ride is much easier if you can show your potential lender that you have good credit history. If you’d like to start establishing yours, and maybe put off that vehicle purchase while you build your credit.

» COMPARE: Explore the best credit cards for people with no credit history

Consider opening a credit card, making payments on time, keeping your debt low and monitoring your credit score. You could also ask someone to add you as an authorized user to a credit card, or you could take out a credit-builder loan to get yourself on the credit radar.

» Ready to get started? Grab your free credit score from NerdWallet.

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