Home Tips Need A Car Loan, But Got No Credit History? Try These 3 Tips To Secure A Loan

Need A Car Loan, But Got No Credit History? Try These 3 Tips To Secure A Loan

by Finance Spot

For most people, buying a new car does not mean going to a showroom with an enormous cash bag and leaving behind the wheel of your dream motor. The reality is that not many people have that much spare cash, and the much more likely scenario is that buying a new vehicle will involve some sort of car loan.

When you apply for a car loan, the first thing a lender does is to check your credit score and history. However, some people have no credit history, due to their young age, or the fact that they’ve never previously applied for credit. If you are in this situation, securing a car loan might seem stacked against you.

There are a couple of things that you could do to quickly build your credit score if you know that you are going to be applying for a car loan in a month or two. You could get a store card and use this to pay for several affordable items that you then pay off immediately at the end of each month. Another thing to try is taking out a credit-builder card, as these cards are designed specifically for people with poor or no credit histories.

However, if you find yourself in the showroom, desperate to have your dream car, but without the big bag of cash, there are a few tips that might secure you a car loan.

Use A Lender That Works With Poor Credit-Scored People

Some lenders are quite content to work with people with poor credit histories, or none at all. It is easy to find such companies, and an online search is the best place to start looking. Having identified several potential lenders, do some research on each of them. Compare the interest rates they offer, also their lending terms and conditions. Use the information you find to make an informed decision about which lender to go with. One of the main benefits of using this type of lender is that their approval rate is relatively high.

photo of man working on laptop whilst on a phone call

These lenders expect to be approached by people with poor credit ratings, so their acceptance criteria are set accordingly. In some cases, all you will need to prove is that you have a reliable income source.

Of course, with this ease of acceptance, there is going to be some downside too. The interest rates on loans from these companies tend to be considerably higher than what high-street lenders can offer. So, one of their loans means you’ll be paying more for that dream car.

This high interest is the main reason you need to shop around to get the best product to suit your needs. Make sure you calculate the repayments first and make sure you can afford to pay them before committing to a loan.

Find Someone To Act As Guarantor 

Finding someone to act as a guarantor for your loan will significantly improve your chances of being accepted. A guarantor could be a friend or member of your family, and their role is to provide the lender with a bit of additional security over repaying the loan. 

If you are unable to make the payments, the guarantor becomes liable for the loan. Applying for a car loan, and having a consignee with a good credit history may well sway lenders to approve your application.

Before you ask someone to guarantee your loan repayments, consider that you are asking them to put their own credit rating on the line for you. Failing to make the repayments will harm their future credit requests as well as yours.

Consider A Bank Loan or Your Local Credit Union 

photo of young couple signing paperwork

The advantage of borrowing from your bank rather than another lender is that your bank knows you better. Your bank may be willing to provide you with a car loan even if you have no credit history. They may be prepared to do this because your bank has a better overview of your entire transaction history. If you’ve been a loyal customer with your bank for several years, they may give you a loan to purchase your new car. Another avenue to consider is your local credit union.

These organisations take a more personal approach to lending than other lenders, and you may well be able to secure a loan with no credit history. Credit unions may be able to offer you better interest rates than you would get from the car dealership.

To apply for a loan from a credit union, you first need to become a member. You can find your local credit union by searching HERE.

You have to have some affiliation with the credit union to become a member. For instance, coming from the local area or being part of the same organisations as other members. They will enquire about your credit history, but they tend to be more flexible than other lenders. 


Securing a car loan without any credit history can be challenging, and you might end up paying more for your vehicle. However, with a bit of planning, you could secure a loan that gets you your new car and set you up for a better credit rating.

Related Posts