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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 an online auto loan for the first time, it’s important to understand how automobile dealerships and lenders view you, and what you can do to improve that image. This can help you prepare well in advance to apply for an online auto loan for the first time, so that you are in a better position to get approved for a car loan with a lower interest rate and better terms. After all, you want your monthly auto loan payment to be the lowest it can possibly be, right?
Who can apply for a first time buyer car loan? Some people who may be helped by the first time auto loan program are:
* Teenagers, individually to buy their first car in their name will need to apply for a first time buyer auto loan as they have no credit history behind them
* First time college students away from home often do not have time to build a credit history prior to attending school and therefore will need to apply for first time buyer car loan programs.
* People who have always paid cash for vehicles in the past but now want to upgrade to a new one or are forced to take a vehicle loan as they currently do not have the cash funds to buy a vehicle
* Immigrants who moved here from other countries, and thus 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 understand is that not all first time borrowers are in the same boat. There are a lot of different factors that can work either in your favor or against you when you are applying for auto financing online. For example:
* Are you employed full time or part time? If you are not employed, what is your income? Not being employed isn’t a game stopper, but if you’re planning on putting your name on the car title and auto finance, you’ll need to demonstrate that you have a job, regular income or other funds that support you. Will pay your monthly auto loan payment. Of course, the higher your income, the easier it is to qualify for lower interest rates for first-time buyer auto loan programs.
* Do you have no credit history as you are just starting your financial life, or do you have a bad credit history/low credit score because you have had some credit slip-ups in the past? The dealership will definitely work with you in any case. However, if your credit score is low, depending on how bad your credit history is, the dealership may be inclined to offer you a higher interest rate and lower credit limit on a first-time buyer auto loan. , which is not the opposite of any. Have made any credit mistakes in your financial life so far.
Note, check out our recent article titled “How To Get Approved For An Auto Loan With Bad Credit With Low Income” to know how to remove unwanted items from your credit report to increase your credit score.
* Will you have any funds available to make the down payment on your auto loan? Whether you’re applying for a first time buyer auto loan, or if you’ve had auto loans in the past and need another now, here’s what each auto dealership or lender will consider when evaluating your application and the items on this list. will do; How much risk are they taking on in giving you the auto loan and if there is anything they can get you to do to reduce that risk. Making a down payment is one thing you can do to reduce the dealership’s risk, making them more likely to approve your automobile loan faster and offer you a more reasonable interest rate. Furthermore, a down payment will obviously reduce the amount you owe on the vehicle and hence your monthly payment will be lower and more affordable. Getting an online auto loan usually doesn’t require a down payment, but they can be very helpful when negotiating with dealerships. Even a small down payment can make a difference in how the dealership views you.
* Is there anyone you know who would be willing to co-sign your auto loan for you? A cosigner is not required to get an online auto loan, even if you have bad credit or no credit history. However, using a cosigner can save you a lot of money and make the application process go through much more quickly and easily. A co-signer is someone who puts his or her name on your loan application along with yours, guaranteeing that the loan will be repaid. The limits and maximum amount of your motor vehicle loan will be determined by the co-signer’s income and credit status, not yours. So, if you choose to have a co-signer, make sure he or she has a high credit score. With a cosigner, there is really no need to look for a first time buyer auto loan because you will be treated by the dealership as if you had the high credit score and income.
* What is the ratio of your monthly housing payment to your income? A little known fact is that auto dealerships and lenders pay attention to this number. For example, if you earn $1,000 a month, and your monthly housing cost is $300, your housing cost takes up 30% of your income. Anything over 40% will send up a red flag to the dealership/lender and they may need to convince you that you can make your monthly payments on time. Keep this in mind as you complete your auto finance application.
With the above items in mind, you should be able to get a clearer picture of how automotive dealerships and automotive lenders view you, and what you can do to at least somewhat control that image. Once you submit your application, the dice are thrown and you will see what the dealership offers you at that point of time.
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