Auto Loans for Students

Get Car Financing
Even with poor credit.


Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - September 21, 2018

A student's schedule is typically very busy, and it sure helps to have a car to get around. But can students with little to no credit qualify for an auto loan?

Some lenders and most of the captive lenders (the finance arms of automakers) offer recent student grad loan programs. These programs usually have incentives attached, and it's even possible to qualify for a lower interest rate. Often, there are even programs in place for students who don’t have any credit history.

However, it should be noted that there are still requirements that need to be met in order to qualify. Typically, this means the student needs to be 18 or older, earn a certain amount of income, have proof of graduation, or have good credit. Also, some captives reserve such programs for recent graduates who can show proof of present or future employment.

If I Have Bad Credit, Can I Still Qualify?

Unfortunately, the majority of "traditional" lenders, such as banks and credit unions, aren’t willing to approve auto loans for consumers with bad credit. But some lenders still make loans available to individuals with poor credit scores.

However, most of these subprime lenders are indirect lenders, meaning you can’t directly apply with them for a loan. Instead, they work through dealerships that have a special finance department. These special finance dealers are typically teamed up with several subprime lenders. If a student applies through one of them, they’ll do what they can to get that borrower approved through one of their lenders.

These lenders also have requirements that students needs to meet. While there’s no universal standard, to meet the typical requirements for most subprime lenders a borrower has to:

  • Be 18 years of age or older
  • Be a legal citizen and resident of the United States or Canada
  • Be employed or have a regular income with at least three years of employment history
  • Earn a minimum monthly income of $1,500 to $2,000 before taxes are taken out

If the student has bad credit, these are the guidelines they generally need to meet in order to qualify for an auto loan.

Tips to Get Approved

Here are some steps to can take to help your chances of being approved for an auto loan if you have bad credit.

  • Improve Credit Before Applying: Check credit reports and scores beforehand. Try establishing a strong payment history for a year by never missing a payment and getting credit card balances under 30 percent of their limits.
  • Budget For Your Purchase: Look at your finances, consider your exact vehicle needs, and set a budget. This prevents you from taking on too large of a loan and buying an unaffordable car. Remember to consider insurance, fuel, and maintenance costs as well.
  • Shop Around: It won't hurt to exhaust every option available. If you have an account at a bank or credit union, visit them first to see if they can pre-approve you. In addition, try applying with several different captive lenders or major lenders known for car loans. Every lender is going to have different requirements, so shopping around may help you find a lender you can qualify with.

The Bottom Line

One final tip: it wouldn't hurt to prepare a down payment or see if a parent with a good credit score is willing to cosign for you. Both of these things can help your chances of being approved.

If you’re a student and still having trouble finding an auto loan, it might be time to let CarsDirect give you a hand. We help people get connected to a local dealership that specializes in helping people in unique credit situations. See what we can do for you by completing our free and easy auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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