How to Get a Car Loan With No Credit History

The Easiest Way to Buy a Car in Canada.

Without a credit history, it’s difficult to get credit. Lenders want to see that you’ve previously borrowed money and can pay it back on time. However, having no credit score doesn’t necessarily mean that you have bad credit, or that it’s impossible to get a loan. Having a blank credit report is common amongst Canadians – 1 in 10 people don’t have any credit history. If this is you, don't worry, we can help!

If you have a credit report that is inactive or no credit history at all, here are three things that will help you get approved for a loan.

How To Get a Loan With No Credit History

Canada’s major credit bureaus, Equifax and TransUnion, will only create credit reports based on a person’s two-year activity. If you have a credit report that is inactive, or no credit history at all, here are three things that will help you get approved for a loan if you have no credit:

What you’ll need:

  • Proof of Employment
  • Drivers License
  • Co-signer (Optional)

1. Organize your documents

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You'll need your: employment history and pay stubs, previous residencies, and how long you stayed, and your driver's license. You will demonstrate that you have good employment history, living situations and bill payments. Lenders will look at your credit history to determine if you are financially responsible. However, if you don’t have any history, they can examine other factors to decide whether you’re at risk or not. Information can be pulled from your banking accounts to see how you manage your money, and this can be a vital component to getting a loan.

2. Find a co-signer


Although getting a co-signer isn’t possible for everyone, if you can find a relative or close friend to sign, you’ll increase your chances of getting approved. Finding a person with good credit to be your co-signer will make lenders feel more confident about giving you a loan. However, your loan will reflect on your co-signers credit report, and they will be responsible for any debt that you’re unable to pay, so it’s important that both parties understand the risks involved with taking this route.

3. Improve your credit score


It’s never too late to start building your credit history, and being able to prove that you can manage your money to lenders is well worth the effort. Sign up for a credit card that is going to help you establish a good score by making your payments on time, like a guaranteed credit card, or work with a lender who specializes in credit building through a personal loan. Any consistent and responsible use of credit will show creditors that you’re reliable enough to be eligible for a loan.


Lenders want to see that a person is financially accountable before they give out a loan. However, having no credit history doesn’t always mean that you won’t qualify. Propose other documents to lenders that show how you manage your money, sign with a co-signer who is willing to help you, or build your credit history with a guaranteed credit card or credit building personal loan.

You don't need a credit score to finance your car purchase. Visit Canada Drives, because regardless of your credit score, we can help you get pre-approved for a car loan. See what you're eligible for: Get pre-approved online today!

Three situations that could impact the type of auto loan that you’re approved for:

1. First Time Car Buyers

On your credit report, lenders look for two types of credit – installment and revolving.

  • Installment credit, like an auto loan or student loan, is the type of credit that once you pay off, isn’t available for you to spend again.
  • Revolving credit, however, is the opposite. Like a credit card, revolving credit means that once you pay off your monthly balance, the funds are available for you to use again.

Lenders view an applicant that has both installment and revolving credit as someone with a healthy credit mix. However, if you’re a first-time car buyer, chances are slim that you can show creditors that you have experience with different kinds of loans.

This could impact how quickly you get approved for a car loan or the interest rates and fees associated with the car loan that you qualify for, especially when you apply with a bank – a lending institution that typically has more strict policies when it comes to approving someone with no or poor credit history.

Canada Drives specializes in helping Canadians with no credit get pre-approved for a car loan. You can apply online in minutes to see what types of vehicles you qualify for. 

2. No Credit

If you’re new to Canada or Canadian credit, or you’re a young adult who hasn’t had time to build their credit, the process of building your credit score can be overwhelming.

A person new to Canadian credit, or someone who doesn’t have any credit at all, should look to lenders that specialize in helping people with this credit standing if they want to apply for an auto loan. It’s not uncommon for a person to wait until they’re well into adulthood before wanting to apply for a loan.

The best way to ensure you’re making the best impression with a lender as a no credit car buyer is to be prepared. Having additional documents organized – like your employment history, a letter from your landlord, or utility receipts – will show lenders that you’re responsible enough to start building your credit history up by making on-time payments.

Another great way to increase your chances of being approved for a car loan with no credit is to apply with a cosigner. Signing with a cosigner usually puts a lender’s mind at ease, because if you ever default, the lender has a second party to turn to when it comes to payments being made.

At the end of the day, people who apply for a car loan with no credit need to make sure their car loan fits their lifestyle and budget so that it’s possible to grow your credit.

3. Bad Credit

Nobody has perfect credit. In fact, roughly 20 percent of Canadians have credit scores that fall between 680 and 749.

If you’re a Canadian who has a history of a consumer proposal or bankruptcy on your credit file, your credit score might fall below 520. However, your credit score isn’t the only factor that lenders consider before approving an applicant for a car loan, and it’s never too late to start rebuilding your credit.

If you’re somebody who is in the market for a new vehicle and you think your credit health might be struggling, the best thing to do before you apply for a loan is to request a copy of your credit report for FREE from Borrowell. By doing so, you’ll be able to see what exactly is impacting your credit score, which could help you make smarter financial moves in the future and help you get approved for a car loan with better rates.

Where can you get a car loan with no credit?

Today, you can get a car loan with no credit by working with an auto company that looks beyond credit scores. Canada Drives leverages technology to look beyond credit scores and help Canadians get approved for great vehicles and financing options.

If you are car shopping with no credit or (or bad credit), we can help! Get pre-approved for free today to see what you're eligible for.

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