With the price of the average new car well over $20,000, it is no wonder buying a new set of wheels also generally means taking out a car loan. If you are in the market for your first vehicle, chances are you will also need to shop for a car loan. But how do you get your first loan when you have no credit history to speak of?
Getting your first car loan can be difficult, especially if you have not yet established a credit history. Lenders are often reluctant to write car loans for buyers with no history of paying the money back, and that can mean denials and the inability to get the car you want and need.
Landing that first car loan can be difficult, but there are some things you can do to tip the scales in your favor. Here are some tips for getting a car loan when you are a first-time buyer without an established credit history.
Try to Make a Big Down Payment
As a first-time car buyer, putting a larger amount down will help you in two important ways. For one thing, a larger down payment means a smaller loan, and that can make potential lenders more likely to approve the arrangement.
Making a larger down payment also means lower car payments for the life of the loan. That means it will be easier to make those payments and build up your credit, so getting your next auto loan will be far easier.
Talk to Your Local Banker
If you have a checking or savings account at a local bank, make that your first step when you start shopping for a car loan. Talk to the loan officer at your bank, introduce yourself and explain that you are young and have no credit history.
That personal touch can make a big difference when taking out your first loan and having a chance to explain your unique situation can make the loan officer more likely to approve you.
Put Your Payments On Automatic
If you are approved for your first car loan, you will want to be extra sure to make your payments on time. Setting up an automatic transfer from your checking account to the car loan payment can help you avoid late payments and other problems.
Like it or not, buying your first car will probably come with a hefty car loan, and getting a lender to take a chance on you can be a real challenge. The more you know about how the loan process works and the role your credit history pays, the more likely you are to get the loan you need so that you can take your place behind the wheel with confidence.