What is a first-time auto loan?
A first-time car buyer loan may be offered by certain car manufacturers to incentivize shoppers to purchase their vehicles, or it may be offered by financial institutions looking to help certain customers gain the ability to buy a car. Many of these loans and programs are available for both new and used vehicles.
As a general rule, the idea is to keep your car payment below 10% of your monthly take-home pay. First-time buyers should keep in mind that a loan is only one element of the process. New car owners will need to consider the ongoing maintenance expenses associated with vehicle ownership, including insurance, gas, repairs and upkeep.
Who is eligible for first-time buyer car financing?
Potential participants must be at least 18 years old. Many have income requirements and have a condition of employment as part of the approval process. But there are a variety of programs available. Some target those with little or no credit history. Some manufacturer first-time buyer programs restrict what kind of car you may purchase. So, be sure to shop around to find the program that fits your needs and requirements.
Are there first-time car buyer loans for students?
Yes, there are specific programs designed for student first-time buyers. You may not be able to get the top-of-line vehicle of your dreams, as many of the programs limit the loan amount, but if you meet some basic requirements, even those with limited credit and income can secure a loan. Keep an eye out for lenders who offer loan discounts for maintaining a high GPA.
Are there first-time car buyer programs near me?
While you can shop for first-time buyer programs online, it may make sense to explore your local financial institutions for help. Some credit unions offer special programs for younger members seeking an auto loan that include rate reductions if certain program milestones are reached, like the completion of training modules.
How to get a first-time auto loan
Much like any other loan, applying for an auto loan requires a peek into your credit history, income expectations and payment history. Because first-time buyers rarely have that background, lenders may want you to follow these steps:
First-time buyer car financing can be tricky. It is important to understand that it is a process that many people have been through. Make sure you shop around to understand any extra fees and charges that could apply to the loan. Get an idea of annual percentage rates (APR), so you can understand the total cost of the loan and compare lenders in a more comprehensive manner.