Editor's choice: Carvana
- Most credit types welcome
- 45-day preapproval
- Seven-day guarantee
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|Lending Tree||Starting 3.09%||1 to 7 years||18+ years old, good to excellent credit, US citizen|
|Boro||Starting 6%||1 to 5 years||US citizen, permanent resident or F-1, OPT, H-1B, J-1, L, O-1, G, A5 or C8 visa holder, minimum GPA, dealer in eligible state|
|Auto credit express||Varies||3 years to 6 years||Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.|
|Carvana||Varies||Up to 6 years||18+ years old, annual income of $4,000+, no active bankruptcies|
|Road Loans||Varies||Varies||Be 18+, monthly income of $1,800+, reside in a state where RoadLoans operates and do not have open car loan with RoadLoans, parent company Santander Consumer USA or Chrysler Capital||Read review|
Follow these steps to find a car loan when it’s your first time financing a vehicle.
You can easily check your credit using a budgeting app like Mint or through other online sites. If you don’t have a credit score or yours is below 670 — what most lenders consider to be good credit — you might want to consider applying with a cosigner.
Specifically, figure out how much money you have available after covering essential costs each month, such as bills and food. Use this number to help you figure out how much you can afford to repay each month on your car loan. Ideally, you should leave yourself some wiggle room for miscellaneous purchases and emergencies.
Use online sites like Kelley Blue Book or Edmunds to figure out what type of car is in your budget and what you like. You can use this to narrow down dealerships — or decide if you even want to buy from a dealership. If possible, check how much different sellers are charging for that car so you have a solid basis for negotiation.
If you have the time, make sure you save up to make at least a 20% down payment. This will save you in both the short and long term. A smaller loan amount means lower monthly repayments — or an interest-saving shorter loan term. And you won’t have to ever pay interest on the money you pay up front.
Start by looking for lenders that can finance the type of car you’re interested in and that you — and your cosigner — can qualify with. Then compare rates, terms and loan amounts to find the best deal.
Once you’ve narrowed it down to a handful of options, consider prequalifying with a few to see what types of rates are available to you. This typically won’t affect your credit score since it doesn’t involve a hard credit check.
Getting preapproved with a lender is almost like getting the car loan — you’ll know exactly what rates and terms you can get, but you have between 30 and 90 days to shop around. You’ll go through a hard credit check that can lower your credit score and submit documents verifying your identity and finances.
Once preapproved, you can use that quote to negotiate with a dealership for a better deal. Can’t get a better deal? You can still sign those original loan documents.
You’ve found the loan, you’ve found the car. All you have to do is sign the paperwork. You might want to check out our guide to car loan scams so you know what red flags to watch out for. And since it’s your first time, it might not hurt to bring on an experienced borrower to help assess the situation.
Some dealerships offer first-time buyer programs that make it easier to qualify for a loan. The terms offered and eligibility criteria differ between lenders, but you may be able to borrow a loan for your first car that you might not have otherwise been able to borrow.
They might sound like just what you need when you’re unsure of what you’re getting into. But you might not always get best deal. Some programs might rush you into buying when you might benefit the most from waiting. Others might steer you toward higher-interest financing options. Vet the program before you sign up.
Depending on what kind of car you’re buying and your own personal financial situation, you may want to consider one of the following loans:
Generally, you need to meet the following requirements to get a good deal on a car loan:
You might want to consider a cosigner in the following situations:
Information that’s generally requested by lenders includes:
You may need to apply with multiple lenders and could face rejection if you have a limited credit history. When you’re ready to apply for a loan, consider requesting quotes from multiple lenders using a broker. Many auto lenders can offer you preapproval that won’t count as an inquiry on your credit.
If this is your first car-buying experience, here are a few pointers to help you through the process:
Consider these potential drawbacks before taking out your first car loan:
Your first car loan may not be the cheapest financial move, but it’s one that can make a difference for years to come. The good news is on-time repayments on this loan can help build your credit, making future loans that much easier to qualify for. You can find more tips for navigating the process with our guide to buying a car for the first time.
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