Can You Get a Loan at 18 Without a Cosigner?

Reviewed Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors opinions or evaluations.

Trying to get a personal loan can be difficult without a credit history or co-signer. Without either, lenders have limited information to determine whether or not you can repay a loan.

Yet, there may be other ways to secure the funding you need, such as a secured loan or applying with a lender that uses an alternative lending model. With limited credit, you may be offered loans with high interest rates, so compare options from multiple lenders before you accept a loan.

Turning 18 is an exciting milestone You can vote, serve in the military, and sign legal contracts – you’re officially an adult! But one thing many new 18-year-olds want is a loan, often for a car, education expenses or to start a business The problem? At 18, you likely have little to no credit history.

Traditional lenders like banks usually want to see a strong credit history before approving financing. Without one, you may get rejected for a loan or get stuck with a crazy high interest rate. This is where a cosigner can save the day!

Adding a creditworthy cosigner to your application means the lender will consider their credit score and income alongside yours This gives you a much better shot at approval and decent rates But what if you don’t have someone who can cosign a loan for you? Is getting financing at 18 without a cosigner still possible?

The short answer is yes: There are ways to get loans at 18 without a cosigner, but it requires a bit more work. Here are some tips and financing options to consider if you need a loan at 18 with no credit history or cosigner.

Build a Credit History

Before applying for a regular unsecured loan, first focus on building some credit history that shows lenders you can handle payments responsibly. Having at least 6 months of positive payment history can significantly improve your approval odds and interest rates.

Some easy ways to start building credit at 18 include:

Getting a secured credit card: With a secured card, you make a cash deposit that acts as your spending limit and collateral.
Becoming an authorized user: Ask your parents or guardians to add you as an authorized user on one of their established credit cards. Their payment history will begin appearing on your credit reports.
Opening a credit builder loan: Also known as a secured installment loan, this lets you “borrow” an amount that gets held in a savings account while you make monthly payments. The lender reports the payments to credit bureaus. Once it’s paid off, you get the money that was on deposit.
Using “alternative data”: Many online lenders and fintech companies look at phone and utility payments, bank account history and other nontraditional factors when underwriting loans. If you have positive alternative data, it can supplement your short credit file.

Know Your Credit Score

Before applying for financing, check your credit reports and FICO or VantageScore from all three major credit bureaus. Many banks and lenders have strict minimum credit score requirements, so knowing where your credit stands can give you an idea of what loan options may be within reach.

For example, while some lenders may require scores of 700 or more, others provide access to credit for borrowers with scores as low as 300. Checking your credit first helps set realistic expectations. Plus, reviewing your credit reports allows you to dispute any errors that could be dragging down your score.

Compare Lenders

Rather than assuming you’ll need a cosigner, compare options from lenders with more flexible underwriting criteria for young borrowers:

Online lenders: Many fintech companies and online-only lenders look beyond credit scores to factor in your complete financial picture. Income, savings, job stability and other details can outweigh credit history.
Federal credit unions: Like local banks, credit unions want to serve their communities. If you or your family has an existing relationship, a credit union may approve a loan without requiring stellar credit or a cosigner.
Peer-to-peer lenders: Services like Upstart and LendingClub match borrowers with individual investors willing to fund loans. They may accept applicants with short or nonexistent credit histories.
Subprime lenders: Specializing in credit-challenged borrowers, subprime lenders offset the added risk by charging higher interest rates on their loans and credit products.
Auto dealerships: Many have relationships with special finance lenders to help first-time car buyers get approved for auto loans without a cosigner, even with bad credit.
Student loan lenders: For federal and private student loans to pay for college or vocational education, having a cosigner is recommended but often not required.

Apply for a Joint Loan

Adding a joint applicant with better credit can still improve your chances of approval compared to applying solo – even if they aren’t an official cosigner. With a joint personal loan, each applicant is equally responsible for repayment, so the lender accounts for both incomes and credit histories.

A family member or spouse with great credit willing to apply alongside you for a joint personal loan can offset a lack of credit or cosigner. Just make sure you only borrow what you can realistically manage together based on your combined incomes.

Ask for a Low Loan Amount

For your first-ever loan, avoid requesting too much. Many lenders willing to finance younger borrowers will start under $2,500 for the first loan. Paying off that initial small loan can then help qualify you for higher amounts later.

Sticking to lower amounts when financing without an established cosigner signals to lenders that even if your credit profile is limited, the loan balance itself poses little default risk.

Use Collateral If Possible

Secured loans require you to offer collateral – like a car title, cash account or savings bonds – that the lender can seize if you fail to repay. The guaranteed collateral reduces the lender’s risk when approving applicants with limited credit histories.

Besides cars and homes, examples of secured loans include:

Share secured loans from credit unions using funds on deposit as collateral
Cash secured loans backed by a certificate of deposit (CD)
401(k) or life insurance policy loans
Pawn shop financing with jewelry, electronics and other valuables used as collateral

While defaulting means you could lose the collateral, on-time payments help build your credit. Secured installment loans tend to get reported to the credit bureaus, unlike payday loans.

Provide a Down Payment

Similar to collateral, making a down payment shows good faith. With unsecured loans, like a small business loan or private student loan, offering 10-20% or more as a down payment upfront can sway a lender to extend financing without requiring a cosigner’s signature.

The higher the down payment, the lower the amount actually being financed reduces the lender’s risk exposure on the loan. Plus, making a sizable down payment proves you have some savings – which not all young adults can do.

Get a Cosigner When Possible

While getting a loan without a cosigner is possible in many cases, having one is still the surest way to increase approval odds and get better rates. If your parents, other relatives or family friends have strong credit and stable incomes, ask if they’d be willing to cosign your first car loan or student loans.

Besides potentially qualifying for thousands more in financing, cosigners can help lower interest rates by up to 5 percentage points compared to what you’d pay on your own with little or no credit history.

Just be sure to never miss payments on a cosigned loan and pay it off according to the terms. Defaulting or prolonging repayment hurts the cosigner’s credit too!

Consider Federal Student Aid First

Before taking out private student loans, max out all free grant aid, scholarships, work-study opportunities, and federal student loans under your name. Federal student loans don’t require a credit check or cosigner; eligibility is simply based on financial need.

In total, undergraduate students can borrow up to $31,000 in federal Stafford and Perkins loans alone during college without any credit history needed. If those options don’t cover your total education costs, then look at private student loans requiring a creditworthy cosigner or other strategies to fill the gap.

Boost Your Income

While not easy, notably increasing your income can improve your loan application. A higher income often means lenders will approve larger loan amounts with better rates for applicants with minimal credit histories.

Options to increase income as an 18-year-old include:

Taking on a side gig or part-time job on top of your full-time job
Freelancing in your area of expertise – like photography or web design
Starting an online store, monetizing YouTube videos, or creating a dropshipping business
Participating in market research studies, survey sites, and paid medical trials

Keep in mind, proven income sources tend to weigh more heavily than speculative or inconsistent ones.

Ask About Young Adult Programs

Some lenders offer specialized lending programs geared for borrowers under 21. These programs factor in elements like lack of credit history and young age when underwriting loans.

Often, they will discount interest rates for young borrowers who take financial literacy courses or meet other educational conditions as part of the loan program. Ask banks and credit unions you use if they have any targeted lending options for young adults.

Consider a BOP Loan

BOP loans are smaller personal loans designed specifically for borrowers with “beginner, opener, or pioneer” credit profiles. That describes most 18-year-olds.

Average BOP loan amounts range from $500 to $5,000, with terms from one to five years. Required credit scores fall between 550 and 650. Interest rates are higher than traditional unsecured loans but not

Ways To Get a Personal Loan With No Credit History or Co-signer

Having no credit history or co-signer can make it difficult to qualify for an unsecured personal loan. An unsecured loan doesn’t require collateral, so most lenders require good credit or a creditworthy co-signer as reassurance that you’ll repay your loan.

If you can’t provide either, consider these four alternative options.

You may be able to qualify for a secured loan, which is backed by collateral such as your savings, vehicle or another asset. Lenders often offer more flexible credit or co-signer requirements for these loans because of the collateral.

If you fail to repay a secured loan, the lender can take possession of the collateral and use it to recoup its losses, making secured loans a risky option as a borrower.

Banks, credit unions and online lenders all offer secured personal loans, giving you various options to consider.

Credit Union Loans

Credit unions may also be able to provide personal loans if you have no co-signer or credit history. Some credit unions also offer payday alternative loans (PAL), which have flexible credit requirements. You can borrow up to $2,000 with repayment terms as long as one year, depending on the type of PAL.

Keep in mind that most credit unions have membership requirements. You may need to live in a certain area, work for an eligible employer or belong to a qualifying organization to join and borrow money.

Payday loans are often available to borrowers with no credit history or co-signer, but they can be predatory. These loans can have exorbitant fees, sometimes equivalent to annual percentage rates (APRs) as high as 400%.

You’re typically required to repay a payday loan on your next pay date, which can be difficult with the fees. If you miss the repayment date, you can end up paying back more than you borrowed.

Since payday loans can become expensive, they can trap borrowers in a cycle of debt that’s hard to escape. On top of that, you can also damage your credit.

In the worst-case scenario, you might also encounter a loan scam that promises no-credit-check loans in an attempt to steal your money or identity. Make sure to research that a lender is reputable before borrowing, especially if it’s offering no-credit loans.

Most experts recommend borrowing a loan with an interest rate no higher than 36%. If you’re looking at an offer with a rate higher than 36%, be sure you can afford to repay it on time. A personal loan calculator can help you understand the payments you’ll make.

How To Get a Student Loan Without a Cosigner

FAQ

Can an 18 year old with no credit get a student loan?

Federal Student Aid Federal direct loans are available to all college students, regardless of credit score or income, and everyone receives the same fixed rate. All you need to get them is to complete the Free Application for Federal Student Aid (FAFSA).

Do you need a cosigner at 18?

A co-signer vouches for someone who’s applying for their own credit card. The co-signer guarantees that if the cardholder can’t make payments, they will. Co-signers have to be at least 21 and show they can make payments on the account. Keep in mind that many major issuers don’t allow co-signers.

Does an 18 year old need a cosigner for a student loan?

For most federal student loans, you can apply without a co-signer. This is because all undergraduate loans and some graduate school loans do not require a credit check and therefore are available to all eligible students who wish to apply.

Can I get a car loan without a cosigner?

You can qualify with these providers even if you have bad credit or no credit profile. It’s possible to get a car loan without a cosigner, even if with bad credit or no credit score. We reviewed over 100 car loan providers before creating this list of providers you might qualify with.

Can an 18-year-old take out student loans without a cosigner?

Student loans Students are one of the only loans an 18-year-old borrower can likely qualify for without a cosigner. You may even be able to take out student loans as a 17-year-old with a cosigner. Many people consider student loans just to pay tuition, but they can also be used to cover some living expenses.

Do you need a co-signer for a private student loan?

Private student loans are credit-based, often requiring a credit score and income that many students don’t have. Applying with a co-signer can improve your odds of approval and chances of being offered a lower interest rate. If you don’t have someone to co-sign your loan, you have options, but you’ll likely pay a higher interest rate.

Does an 18-year-old need a cosigner for a personal loan?

A personal loan for an 18-year-old may require a cosigner, but not all lenders deem it necessary. A cosigner is a person who agrees to take equal responsibility with the primary borrower for the loan. This means both the cosigner and the borrower are responsible for the monthly payments.