Can You Get a Car Loan With No Credit?

Is it better to have bad credit or to have no credit? While both scenarios are less than ideal, lacking is actually the lesser of two evils. Why?

Think about the scenario from the standpoint of a creditor. If you have no credit, that lender does not know whether you will pay your bills as agreed to or not. However, if you have bad credit, you already have a history of not repaying borrowed money in a timely manner.

For this reason, it is a lot easier for a person who has no credit to apply for a car loan as opposed to a person who has bad credit. But that doesn't mean it's easy. Read on to learn things you should consider when looking to get a car loan with no credit.

Can I Get Approved for a Car Loan With
No Credit History?

Yes, but with most lenders, it's not easy. There are auto lenders that focus on helping people who have yet to establish a credit history. There are steps that you can take to improve the chances of being approved for a car loan.

If you have no credit history, your financing options could be limited. You may need to jump through some hoops that a person with excellent credit history does not need to worry about.

This is because lenders prefer people who have created a pattern of being responsible and making their payments on time. Lenders might require a person who has no credit to pay higher interest rates than a person who has a good credit score.

At first, this might sound unfair. However, when you understand why your credit history is so important to the car loan process from the standpoint of the finance company, you will better understand why you may need to pay a little more interest.

Why Do Auto Finance Companies Care About Your Credit History?

In a nutshell, they want to know that you will be able to repay the money you borrow on time. They don't want to find out after lending the money that you either cannot afford to make the payments or that you are not responsible enough with your money to make the payments in a timely manner. Your credit history tells loan companies if you present a credit risk or not.

If you have not used credit enough to build a history of on-time payments, lenders see you as high risk. They may be willing to take that risk, but they also want to be protected, which means higher interest rates for you. High interest rates mean that every month your car payments are going to be higher than what someone else who purchases the same car for the same price with good credit might pay.

Knowing this information is beneficial because you know in advance that a lender is likely going to run a credit check as part of the application process. You can head them off at the pass by reviewing your own credit report. You can identify new car financing options that might work for you, even though you have no credit. Looking at your credit history, or lack thereof, before you apply for a loan gives you knowledge that you can use when negotiating with a car salesperson.

Where Can You Purchase a Car With Little or No Credit History?

Thankfully, there are lenders like New Roads Auto Loans that specialize in helping people who have no credit get an auto loan. While you may not need to have an established credit history to apply for these loans, you will need to show that you have a steady flow of income and that you can make your payments on time.

There may be some limitations on the lenders that you can borrow from. There may also be some limits on the amount of money you can borrow. These limits serve as protection for you and for the lender. The good news is that even if you have little or no credit history, you can still purchase a vehicle.

Special Options for Students

If you are a student or if you have recently graduated, you might qualify for special financing programs. Lenders may look at alternative credit data, such as a student's GPA, income, and the amount of money he or she can leave as a down payment, when making lending decisions.

Credit unions are more flexible in working with individuals who have a less-than-robust credit profile. A credit union might even give you a loan that is designed to help you build your credit as you purchase a car. It is good to talk to your credit union, if you belong to one, about the financing options available for you.

How Can You Increase the Chances of Your Car Loan Being Approved with No Credit?

New Roads Auto Loans is a great place for you to apply for an auto loan if you are getting your first car and have little or no credit history. There are certain things that you can do to improve the chances of you getting your loan accepted:

  1. Get a Cosigner - A cosigner agrees to repay the loan if you cannot. If the cosigner has good credit, which greatly improves your chances of getting a loan. Depending on how good the cosigner's credit is, you might get a lower interest rate than you would have gotten on your own. Even if you do not have a cosigner, it is still possible for you to get a loan without having credit history.
  2. Have a Consistent Income - Lenders may loan money to you without a cosigner and without credit history. However, it is unlikely that they will give you a loan if you cannot show that you make enough money to repay it. You need to have a reliable source of income before you apply. If you can show that you have a consistent paycheck, which means that you have had a consistent paycheck for some time and that you are likely to have employment in the future, then your chances of getting the loan increases.
  3. Make a Down Payment - A lender may want you to make a down payment. This is especially true if you are getting special financing because you are a student. When you make a down payment, you are borrowing less money. This means that it decreases the loan and your monthly payments, and you will pay interest on a smaller amount of money.
  4. Build Your Credit - You can take steps to build your credit in the lead up to applying for a loan. One way to do this is to pay your bills on time. Another way is to get a credit builder loan or a secured credit card from a lending institution. Before doing this, make sure that the payments you make to these accounts are reported to the major consumer credit bureaus on a monthly basis.


Purchasing a new car is a big decision and a serious financial commitment. If you get an auto loan with no credit, paying it back in a timely way can help build your credit and make it easier for you to get another vehicle in the future with lower interest rates.

With New Roads Auto Loans, we offer zero down payment auto loans whether you have no credit history, low or bad credit scores, or you have filed for bankruptcy.

Apply online today and get approved in as little as 30 seconds!