No Credit History? You Can Still Get a Car Loan

Erin El Issa
By Erin El Issa 
Edited by Kathy Hinson

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After comparing prices and going on more than a few test-drives, you’ve finally picked out the perfect vehicle for you. All that’s left is signing on the dotted line. But wait, there’s a problem. You’re in need of a car loan, but you have no credit history. Are you at a dead end, or can you buy a car without a well-established credit score?

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Getting behind the wheel

Unfortunately, having no credit history makes purchasing a car much more difficult. When getting approved for a car loan, lenders take into account your credit score as an indication of your ability to make your payments. (Not sure what your score is? You can get a free credit score from NerdWallet.) If you don’t have an established credit history, you’ll likely 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.

Pedal to the metal

But before you hit the brakes on your dream of a new car, here are a few options for buying a car with no credit history:

  • Co-sign. You’re more likely to drive away with a loan if you find a co-signer who has good credit. In co-signing, someone agrees to add his or her 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 put up 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.

So, the short answer is yes, there are ways you can buy a car with no credit history.

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Down the road

Of course, 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 perhaps put off that vehicle purchase for a little bit while you build your credit. It just takes a little work: making payments on time, keeping your debt low and monitoring your credit score, among others. 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. If you’re considering applying for a first-time credit card, use NerdWallet’s credit card roundup to find the best credit cards for people with no credit history.