Reviewed Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors opinions or evaluations.
Due to the significant cost of purchasing a car, many people choose to finance their purchase with an auto loan. It usually takes good credit to be eligible for a loan, so if you don’t have any credit, it might seem impossible to get the money you need. Thankfully, there are strategies that can help you buy a car with no credit.
According to a financial contract, credit is your individual qualification that enables you to either borrow money or purchase a valuable item, like a car. In this type of agreement, you promise to repay the money you’ve borrowed in the future, usually with interest.
However, lenders don’t want to give away money that they can’t get back. This is why, when deciding whether or not to approve you for an auto loan—or nearly any other kind of loan—a lender will typically take into account both your credit history and credit score.
Yes you can get a car loan even if you just started a new job. While lenders typically prefer borrowers with a longer employment history a new job doesn’t automatically disqualify you.
Here’s what you need to know:
- Length of employment is just one factor lenders consider. Other factors include your credit score, debt-to-income ratio, and down payment size.
- If you have a short employment history, you can compensate by having a strong credit score, low debt-to-income ratio, and a large down payment.
- Full-time employment is not required, but it helps. People who work full-time typically earn more than those who work part-time, which translates into a better debt-to-income ratio.
- If you are starting a new job, be prepared to provide documentation of your income. This could include a pay stub, offer letter, or tax return.
Here are some additional tips for getting a car loan with a new job:
- Shop around for the best interest rate. Compare offers from multiple lenders before you choose one.
- Make a larger down payment. This will reduce the amount you need to borrow and make you a more attractive borrower.
- Consider getting a co-signer. This can help you qualify for a loan or get a lower interest rate.
- Be prepared to pay a higher interest rate. Lenders typically charge higher interest rates to borrowers with a short employment history.
Remember, even if you have a new job, you can still get a car loan. By following these tips you can increase your chances of getting approved for a loan and getting the best possible interest rate.
How to Buy a Car with No Credit
Buying a car with no credit can be challenging, but it is possible. Here are some tips:
- Get a co-signer. This is the easiest way to get approved for a loan with no credit.
- Make a larger down payment. This will reduce the amount you need to borrow and make you a more attractive borrower.
- Get a secured credit card. This is a credit card that is backed by a cash deposit. Use it responsibly and pay your bills on time to build your credit history.
- Become an authorized user on someone else’s credit card. This will allow you to build credit history without having to open your own credit card.
- Take out a small loan and make on-time payments. This will show lenders that you are a responsible borrower.
Once you have built up some credit history, you will be in a better position to get a car loan with a lower interest rate.
Here are some additional resources that you may find helpful:
- Forbes Advisor: How to Buy a Car with No Credit
- Growing Family Benefits: Can I Get a Car Loan if I Just Started a New Job?
Compare Rates and Save on Your Auto Loan
Get up to 4 loan offers in minutes at myAutoloan.com.
Consider a Co-signer
Applying for a car loan with a co-signer could increase your chances of approval if you’re having trouble getting one on your own. Someone with good credit who is willing to share loan responsibility as a co-signer is someone like a parent, another relative, or a reliable friend. Given that your co-signer will be responsible for the loan in the event that you are unable to make your payments, this may encourage a lender to work with you.
This liability makes asking someone to co-sign a car loan a big deal. Additionally bear in mind that your co-signer’s credit will also suffer if you miss payments or default on the loan.
How I Got My First Car Loan With No Credit
FAQ
How long should I build credit before getting a car?
Can I get a car if I just got a credit card?
Can I buy a car with just my credit score?
Can you get a car to start your credit?
Can you get a car loan with poor credit?
Even with poor credit. If you’re applying for an auto loan, not only is your income important to the lender, but your work history is too! If you have a new job and are looking for an auto loan, your work history as a whole may have a say in your eligibility.
Can a good credit score get a car loan?
A person with a very good (740 to 799) to excellent (800+) credit score can often obtain a car loan shortly after starting a new job. In this case, their exceptional payment record overshadows the substandard length of employment. is not a fixed number.
Can I build my credit before buying a car?
If you can hold off on buying, you can implement strategies to build your credit before buying a car. Be mindful that the lender will likely assess your ability to afford the loan by computing your debt-to-income ratio. Consider paying down any existing debt to bring down your DTI ratio alongside other methods of improving your credit score.
Should I buy a car if I have good credit?
Track your budget, finances and credit – all in one place and all for free. If you can afford to wait to buy a car until after you elevate your credit from fair to good, then do so. With better credit you’ll be able to get better financing options and lower rates for car insurance.