How can I get a car loan with no credit?

I recently graduated high school and need a car to commute to college and my job. I don't have any credit history, though. I've heard that can make it challenging to get a loan. What’s the easiest way to get a car loan with no credit?

Answer
Congratulations on graduating from high school and getting into college! I’m happy to report that you can get a car loan with no credit.
Here’s how:
  • Get a cosigner
  • Make a large down payment
  • Get a loan through a lender that specifically works with students or those with no credit
Cosigner: A family member or friend with a good credit score makes an excellent candidate. However, the cosigner will be on the hook for the loan if you fail to make payment, and both of your credit scores will likely be damaged in the process. So only enlist the help of a cosigner if you are confident in your ability to pay.
Large down payment: If you can afford it, paying a significant portion of the car’s sticker price up front shows financial discipline and reduces the total amount you’ll need to borrow. Then, lenders will be more likely to work with you because there’s less for them to lose.
No credit or student-specific lenders: Do your research if you go this route. Your local credit union may give you a good deal upon becoming a member. Many banks, dealerships, and online lenders also have departments that work with students and/or individuals with no credit. Just ask!
After making several on-time loan payments and building up your credit score, you may be able to refinance into a lower-interest loan or remove your cosigner—or both! A quick way to refinance is through the Jerry app. On average, those who refinance pay $85 less every month.
Lauren Smith
Answered on Nov 18, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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