how to get a car loan as a college student

by Aidan Kang, CFA
Senior Writer
UPDATED: July 26, 2021

You need a car. The problem is that you are a broke college student and you’re worried that no lender will let you buy a car in your current situation. What can you do to change this scenario? Being a college student with no job and no credit history definitely works against you but that does not mean that it’s impossible to get a car.

 Of course, the easiest way and perhaps the most obvious way is to ask your parents to get a car under their name, which you’ll promise to pay for every month. However, that is not always an option available to all students. If you are looking to get an auto loan, read on to find out how to go about this process.

Are There Car Loans for College Students?

The first question many college students ask is if it is even remotely possible to get a car loan. The answer is YES. It is possible to get a car loan even if you’re still in school as long as you meet the requirements set by the auto loan lender. Below are some of the basic requirements when applying for a car loan:

  • Proof of Identity. A state-issued photo ID and driver’s license
  • Proof of Residence. This is required to calculate your car loan interest rate.
  • Proof of Income. A utility bill under your name
  • Working Telephone. To show that you can manage the monthly payments
  • Personal References. To ensure that the lender can contact you
  • Credit Score. Names with contact details of people they can contact to verify information about you

Depending on the state where you live in, there may be lenders that have tailored student car loan programs. Some car loan lenders offer specialized loans with lower interests rates and extended-pay period for students. Some lenders even accept students with no full-time employment or no credit history. However, you have to show proof that you are enrolled and you are attending regular classes to qualify.

As college students are just starting out their financial history, many of them do not really have good credit. So instead of credit score, there are also lenders who use a student’s GPA as basis in granting a loan. GPA stands for Grade Point Average, which is the standard method in measuring a student’s academic achievement. Not all lenders offer such programs but if you have a high GPA with zero credit history, it might be worth checking out whether there are similar loans available in your area.  

For example, Community Financial, a credit union based in Michigan, offers what they call a GPA Loan. In this program, the student’s GPA has an equivalent credit score rating to calculate the loan rate. This program allows an auto loan up to $15,000.

3.5 GPA and Above

3.0 to 3.49 GPA

2.49 and Below

2.50 to 2.99 GPA

680 – 729 Credit Score Rate

640 – 679 Credit Score Rate

600 – 639 Credit Score Rate

Does Not Qualify

How to Get a Car Loan as a College Student

Are you ready to get a car loan? Not so fast. Unless you’ve held a steady job for the past couple of years and have built a good credit history, this process will not be that easy. If you’re drowning in student loans and credit card debts, then it will be much more difficult. If you’re broke and yet, you still need a car, follow these steps to help you out.

Step 1: Build Your Credit History and Maintain a Good Credit Score

While many car loan companies advertise that they cater to students with zero credit or bad credit, there’s usually a catch. Car loans for college students with no credit usually have sky-high interest rates that will cost you more money than you can afford. You don’t want that to happen because the higher your monthly fees are, the more chances of you not being able to make the monthly payments. This could result in losing your car along the way.

The best bet is to have a fair credit score to qualify for reasonable interest rates. If you have zero credit history, you might not understand what this means. In a nutshell, borrowers are usually classified into five levels to determine their risk profiles.





Deep Subprime 

720 or above credit score

660 and 719 credit score

620 and 659 credit score

580 and 619 credit score

below 580 credit score

When you have a low or zero credit score, this will only qualify you for a subprime or deep subprime car loan – meaning high interest rates. You want to at least have a credit score above 620. And the way to do that is to repair your credit score or build it from scratch.

If you already have student loans, credit cards, and other financial history, you can check your credit score by requesting a copy of your credit report from credit bureaus. You can get it for free once a year. If your credit score is below 600, you have to repair it by making sure you keep your payments on time. It usually takes six months to repair and raise your credit score by 50 to 100 points. Paying off your debt and being a responsible borrower in this period can save you a lot of money in interest payments.

For example, if you’re planning to buy a new car worth $18,000 and pay it for 5 years. According to the FICO loan savings calculator, having an excellent credit score of 720 above means the total interest you will pay only amounts to $1,919. However, if your credit score is 589 and below, the total interest could be up to $8,566. So you pay more than six grand in interest just because of your credit score.

FICO car loan

How to Build Your Credit Score from Scratch?

If you’ve never had a credit account before, you have to build your credit history from scratch. The easiest way to do this is to get a secured credit card. A secured credit card is easier to qualify for because it requires a cash deposit and will not let you spend above the credit limit.

When you get a credit card, there are two important factors that will affect your credit score: credit utilization and on-time payments. As you need to show that you are a responsible borrower, you have to use your credit card, meaning don’t keep it zero. However, only use up to 30% of the credit limit. If your credit limit is $500, try not to spend more than $150 a month. Keep in mind that your goal is to build your credit so don’t go on a shopping spree after getting that plastic by maxing it out. 

Set-up payment reminders on your phone to make sure you don’t miss any credit card payments. A late credit card payment can hurt your credit score especially if it is 30 days past the due date.

Step 2: Find a Source of Steady Income

There are some auto loan lenders that accept college students with no credit history or low credit score. What is usually more important is proof that the borrower will be able to manage the monthly payments. Even if your car loan is only $300 a month, most lenders would require you to show that you have at least $1,500 of income a month. Unfortunately, this is usually a non-negotiable requirement.

If you’re broke, the best route to get a car loan is to show that you have a steady source of funds. If you have a full-time job, this is much easier. You can find auto loans for students with low income as long as you can show your proof of salary.

Are there car loans for college students unemployed? Unfortunately, having zero source of income makes it almost impossible to get a car loan. Usually, lenders would accept alternative sources of income like social security payments or pension as alternative sources of income. College students, however, do not typically have these benefits. 

So if you do not have a job, you can start looking for a high paying part-time job to earn this money. If you start working part-time, as a freelancer, or you have side hustles, you still have to show proof that you’re getting paid. You can use pay stubs, tax returns, or invoices as proof of income.

Step 3: Save Up for a Down Payment

Car experts normally don’t advise paying a huge down payment when buying a car. The recommended down payment is usually at 20% to get the best deal. However. If you are a student, one way that could help qualify you for a car loan is by paying a larger down payment. When you pay up cash up front, the less money you need to borrow, meaning smaller monthly payments.

Step 4: Shop Around for Deals and Rebate Programs

Many car dealerships offer promotions especially towards the end of the year before new models come out. You can usually get great deals on new and used cars that may be above your budget a few months before. Do your research and don’t immediately accept the first deal you find.

It’s also important to note that when you are car shopping, dealers may perform a hard credit check on your credit report, which will dent your credit by a few points. As you are still trying to build your credit, getting multiple hard inquiries could be disastrous. These few points can pull your credit score from fair to poor. When doing your research, try to find the average interest rates without getting a hard inquiry by asking for prequalification or preapproval first.

As a college student, you can also look for rebate programs offered by major car manufacturers. Car companies offering these discounts include Toyota, Nissan, Ford, VW, Honda, and Hyundai. The discount ranges from $400 to $1,000 for college students or those who have recently graduated.

Step 5: Choose a Car That You Can Afford

If you’re broke with a bad credit score, you probably won’t get approved for that brand new Tesla or a flashy SUV. However, it is not uncommon for college students to get trapped into buying a car that they cannot afford. This usually happens when you find out that you can get a more expensive car than the one you were planning to buy. 

Even if the dealer tells you that you can get a more expensive car or you can get a higher loan amount, don’t get easily swayed by the sales talk. Instead, run your finances a few more times and be firm on what car you can reasonably manage to pay for with your current lifestyle.

Bonus Step: Find a Co-Signer

If you’re wondering how you can improve your chances of getting approved for a car loan, you can find a co-signer. A co-signer is someone who will guarantee the loan with you. This is usually a parent or a family member with a good credit score. However, if you fail to make the payments, this will also affect the credit rating of the co-signer.

Best Car Loans For College Students

If you’re looking for a car loan for college students with no credit or bad credit, below are some of the lenders offering student loans.



Click here

Lendbuzz offers auto loans to students with no credit or low credit. According to their website, they consider the full profile of the borrower, education and work experience in granting the loan. They also do not require a Social Security Number or credit history, which makes it accessible for expats or international students.



Click here

CarLoanStudent states on their website that they help college students with no job get a car loan as long as the student can prove that their part-time income can fetch them $1,500 monthly.


fast auto loan approval

Click here

This site offers student loans to students with good credit, bad credit or zero credit. According to their site, their average auto loan approval rate is 87.4%


Click here

Carloanlot is another website that offers student car loans for college students with no job but proof of funds is also required to qualify.

5. Auto Credit Express

auto credit express

Click here

By going to their website, you can locate their network of over 1,000 car dealers that cater to people with bad credit. These dealers specialize in offering auto loans to people with poor credit ratings.


my auto loan

Click here

This website is an online marketplace where you can compare loans from different lenders. However, you have to be careful as lenders may perform a hard credit pull on your report which could lower your credit score. 

Getting the Best Deal on a Car Loan for College Students

A car is considered a major life purchase as you enter adulthood that’s why car shopping can be exciting and frustrating at the same time. It’s important that you carefully plan, research, and make sure that you can fulfill your loan obligations before making your purchase.