Tips for first time car buyers to get online car loans

What are auto loan programs for first time buyers?

Whether you’re buying your first new or used car, or planning to apply for an online car loan for the first time, understanding how car dealers and lenders view you and what you can do to improve that image can help you before you apply for an online car loan for the first time so that you are in a better position to approve a car loan with a lower interest rate and better terms. After all, you want your monthly car loan installment to be as low as possible, right?

Who can apply for a first-time buyer car loan? Some people that first-time car loan programs can help might include:

* Teens who are buying their first car in person in their own name must apply for first-time buyer car loans because they have no credit history behind them

* College students who are new to living away from home often haven’t had time to build up a credit history before going to school, and as a result often have to apply for first-time buyer auto loan programs

*People who have always paid cash for a vehicle in the past but want to upgrade to a newer one or are forced to take out a car loan because they don’t currently have the cash to buy a vehicle

* Immigrants who have moved here from other countries and thus left their credit history behind may need to apply for first-time auto loan programs to begin building a credit history

Not all first-time auto 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 in your favor or against you when applying for online car financing. For example:

* Do you work full-time or part-time? If you are not employed, do you have an income? Not being employed isn’t necessarily a game stopper, but if you plan on having your name on the title of the car and on the car financing, you’ll need to show that you either have a job, a steady income, or other means you have pays off your monthly car loan installment. 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 out in your financial life, or do you have a bad credit history/low credit score because you have had some loan defaults in the past? 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 dealership may be inclined to offer you a higher interest rate and lower credit limit on first-time buyer car loans, as opposed to someone who doesn’t have any credit flaws in them yet made their financial life.

Be sure to read our recent article titled How to Get Bad Credit Car Loan Approval When You Have a Low Income to learn how to remove unwanted items from your credit report to help your improve creditworthiness.

* Do you have funds available to make a down payment on your car loan? Whether you are applying for car loans for the first time or have had car loans in the past and now just need one, what any car dealer or lender will consider when evaluating your application and the items on this list is; How much risk are they taking when they give you a car loan and what can they get you to do to mitigate that risk? Making a down payment is one way of reducing the dealer’s risk, making them more likely to approve your car loan quickly and give you a more reasonable interest rate. Plus, of course, a down payment will lower your debt on the vehicle, so your monthly payments will be lower and more affordable. Down payments aren’t usually required to get online car loans, but they can be very helpful when negotiating with a dealership. Even a small deposit can make a difference in how the dealer sees you.

* Is there someone you know who would be willing to underwrite your car loan for you? Co-signers are not required to get online auto loans even if you have bad credit or no credit history at all. However, by using a co-signer you can save a lot of money and make the application process much faster and smoother. A co-signer is someone who puts their name on your loan application along with your name and guarantees that the loan will be repaid. The limit and maximum of your car loan is determined by the co-signer’s income and credit rating, not yours. So when you decide on a co-signer, make sure you choose one with a strong credit history. With a co-signer, there really is no need to look for first-time buyer car loans as you will be treated by the dealer as if the higher credit rating and income is yours.

* What is the ratio of your monthly housing benefit to your income? A little-known fact is that car dealerships and lenders pay attention to this number. For example, if you make $1,000 a month and your monthly housing expenses are $300, then your housing expenses make up 30% of your income. Anything over 40% sends a red flag to the merchant/lender and they may need convincing that you can make your monthly payments on time. Keep this in mind when filling out your auto finance application.

With the above points in mind, you should be able to get a clearer picture of how car dealers and car lenders view you and what you can do to at least partially control that image. With the application, the die is cast and you will see what the car dealership then offers you.