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What are First Time Buyer Auto Loan Programs?
Whether you’re buying your first new or used car or planning to apply for auto loans online for the first time, understanding how auto dealers and lenders view you — and what you can do to improve that image — can help you be prepared. Before you apply for auto loans online for the first time, so you’ll be in a better position to get approved for an auto loan with a lower interest rate and better terms. After all, you want your monthly auto loan payment to be as low as possible, right?
Who could apply for first-time buyer auto loans? Some people that first-time auto loan programs can help might include:
* Teens who personally purchase their first car in their own name will need to apply for first-time buyer auto loans because they don’t have a credit history to back them up.
* College students living away from home for the first time often haven’t had time to build a credit history before leaving for college, and therefore will often need to apply for first-time auto buyer loan programs .
* People who have always paid cash for a vehicle in the past, but now want to upgrade to a newer one or are forced to apply for an auto loan because they don’t have the cash funds to purchase a vehicle right now.
* Immigrants who have moved here from other countries and thus have left their credit history behind, may need to apply for auto loan programs for the first time to start building a credit history.
Not all first-time auto loan borrowers are in the same boat
The first thing to realize is that not all first-time borrowers are in the same boat. There can be many different factors that can work for or against you when applying for car financing online. For example:
* Are you employed full or part time? If you are not employed, do you have income? Not being employed isn’t necessarily a deterrent to gambling, but if you plan on having your name on the car title and car financing, you’ll need to show that you have a job, regular income, or other funds you need. make your monthly auto loan payment. Of course, the higher your income, the easier it is to qualify for first-time buyer auto loan programs with lower interest rates.
* Do you have no credit history because you are just starting your financial life, or do you have a bad credit history/low credit score because you have had some credit lapses in the past? The dealers will certainly work with you in any case. However, if you have a low credit score, depending on how bad your credit history is, the dealer may be inclined to offer you a higher interest rate and lower credit limit on buyer auto loans for first time compared to someone who hasn’t. made no credit mistakes in your financial life yet.
Please note, check out our recent article titled “How to Get Approved for a Bad Credit Auto Loan If You Have Low Income” for information on how to remove unwanted items from your credit report to improve your credit score.
* Will you have funds available to make a down payment on your auto loan? Whether you’re applying for first-time buyer auto loans, or you’ve had auto loans in the past and just need another one now, what each auto dealer or lender will consider when evaluating your application and the items in it list is; how much risk they are taking by giving you an auto loan and what they can get you to do to mitigate that risk. Making a down payment is one thing you can do to mitigate the dealer’s risk, making it more likely that they will quickly approve your auto loan and give you a more reasonable interest rate. Plus, a down payment will obviously reduce what you owe on the vehicle, making your monthly payments lower and more affordable. There are usually no down payments required to get car loans online, but they can be very helpful when negotiating with a dealer. Even a small down payment can make a difference in how the dealer sees you.
* Do you know someone who would be willing to sign your car loan on your behalf? No cosigners are required to get auto loans online, even if you have bad credit or no credit history. However, using a co-signer can save you a lot of money and make the application process much faster and smoother. A cosigner is someone who puts her name on your loan application along with yours, guaranteeing that the loan will be repaid. Your auto loan limit and maximum amount will be determined by the co-signer’s income and creditworthiness, not yours. So if you choose to have a co-signer, make sure you choose one with a high credit score. With a cosigner, there’s really no need to shop around for auto loans for the first time because the dealer will treat you as if the credit score and higher income were theirs.
* What is the ratio of your monthly housing payment compared to your income? A little known fact is that car dealers and lenders pay attention to this number. For example, if you have an income of $1,000 per month and your monthly housing cost is $300, then your housing cost is 30% of your income. Anything over 40% will send a red flag to the dealer/lender and they may need convincing that you can make your monthly payments on time. Keep this in mind when completing your auto finance application.
By keeping the above items in mind, you should be able to get a clearer picture of how car dealers and auto loan lenders see you, and what you can do to control that picture, at least to some degree. Once you’ve submitted your application, you’ve drawn your luck and you’ll see what the dealership has to offer at that time.