No Credit Auto Loans: Are They Possible?

No Credit Auto Loans: Are They Possible?
  • Opening Intro -

    You want to get an auto loan but realize your lack of a solid credit history may stand in the way.

    Although having established credit is certainly a good way to help you get additional credit, there are some things for you to consider before applying for credit.


By completing some important steps first, you may discover that getting an auto loan from a bank with little or no credit is still possible.

Important Steps

The first step you must take is obtaining copies of your credit reports. You can obtain one free copy annually from Experian, TransUnion and Equifax by visiting This step is very important because your credit report will reveal what creditors know about you. To obtain your credit score, which is offered separately, you can pay the nominal fee these companies charge.

Review your credit reports carefully. You believe that you have no credit, but you may discover that you have established credit by renting an apartment, opened a checking or savings account at a bank or signed up for cell phone service in your own name. Just one credit account is all you need to establish a credit history, and your history does not have to be a particularly strong or long one when applying for an auto loan.

Credit Reports

If your credit report comes up empty, you have confirmed what creditors soon will know: You have no credit history associated with your name. At this point, obtaining an auto loan from a bank on your own seems very unlikely. Getting an auto loan with a parent or other adult as a cosigner is a possibility, but it won’t help you establish credit on your own. Another option is to buy a used car through a car dealer and hope that you get approved for that loan. However, expect very unfavorable terms, including high interest rates. This is hardly a worthwhile way to establish credit to obtain the car you really want.

The best option for you may be to delay your car purchase, taking some time to build your credit. One of the easiest forms of credit to get is a store charge card. Once you have been approved for one, make purchases and pay off your card each month. You can ask to have your credit limit increased, but this will take awhile, advises Tara Baukus Mello with

Friendly Loans

If you absolutely need a car and no one is willing to put his credit on the line by co-signing your loan, you may be able to borrow money from a friend and pay him back as you would with an auto loan. A personal loan between friends is not a way to build up credit, but it can resolve your need for a car. Just get it in writing if you value your friendship.


Federal Trade Commission: Building a Better Credit Report No Credit? Get a Car Loan Anyway

FCIC: Your Credit Scores Free Credit Reports


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Categories: Consumer Financing

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".