You’re finally ready to retire your bus pass, bid farewell to the subway, and say goodbye to your bicycle. You are excited to get your very first car loan, but at the same time, you’re also afraid not to get approved. Fear not for buying your first car isn’t so tough when you know what you’re doing. Here’s a beginner’s guide to securing your first auto loan.
Bring a Co-signor
One of the most sure-fire ways to get a car loan approval is to bring in someone who will back you up. A co-signer has a huge responsibility because he or she will pay what you owe should you default on the loan. Be a responsible debtor and pay everything on time, so you don’t ruin your relationship. Getting this loan approved will also improve your credit score, so you can upgrade to your second car on your own.
Examine Your Credit
If you don’t have a co-signor, then you have to pay close attention to your credit. Check your credit report and credit score. They allow only those with good standing to borrow money for their first car. Make wise financial choices and take care of your credit history.
Go Over Your Monthly Budget
Car loan expenses will take away a huge chunk of your monthly budget. Before applying for a loan, make sure you know exactly where you stand in terms of rent, utilities, food, savings, etc. This will give you an idea what kind of car you can afford. Make sure you have enough left for emergencies.
Save Money for a Down Payment
It’s for the best to have at least twenty percent down payment. A lower loan amount means you will pay less monthly. If you fork out more for your down payment, you’ll also have a bigger chance having a lower interest on your loan.
Look for Lenders and Get Pre-approved
You need to scout around for the best lenders who will help you get the car you desire. Shop around for the best deals, terms, and interest rates. Once you have pinned down your financial institution, get pre-approval to make your car purchase a lot faster.
Consider Specialty Loans
If your credit history isn’t so great, you can consider a secured personal loan. You can use other assets like property or fine jewelry to get a car loan approval. Students who don’t have a credit history but have a monthly income can avail of student car loans that take into account their overall financial health and academic record. Furthermore, some dealers offer a first time car buyer program that makes it a lot easier for you to get your first car.
As you can see, getting your first auto loan to buy that first car isn’t as tough as you think. With the proper planning, you can get your first car loan approval and be well on your way to steering your wheels in the highway.