Financing your first car is more fun than you’d expect. You get the opportunity to work on your discipline, you steadily see the progress towards achieving your goal and finally when you’ve persisted enough, you’re able to buy your car.
While the process is easier said than done, there are a few tips that can help you get your car quickly and with confidence. For everything you need to know about financing your first car, continue reading.
Begin by Preparing
The first step to financing your first car begins with background preparation. Start by considering your monthly income and determine how much you can afford to spend per paycheck. There are general rules of thumb that apply here.
People typically spend between 10-25% of their paycheck on their monthly payments. Calculating the exact range you can afford will help put into perspective the vehicles you can consider buying.
Once you’ve found your spending range, look online and find vehicles that have monthly payments in your budget. You may not find the vehicle of your dreams, but at least you’ll be able to get from point A to point B in a vehicle you worked toward buying.
That’s the ultimate goal for your first car. Once you feel the satisfaction of financing and buying one, there’s no reason why you shouldn’t start financing your dream car soon after. One step at a time, though.
Credit Scores Matter
To finance anything, you’re going to need a solid credit score. Your credit score is a number that indicates how well you can manage money. It tells the dealership whether or not they can trust you to fulfill your payment plan. A good credit score can also save you money over time because good credit scores open doors to better financing opportunities.
From credit cards to mortgages, it is very important that you pay your bills on time. This will put you in better standing and raise your credit score before you start the financing process. Some credit is also better than no credit.
If you do not have a credit card, you should consider getting one solely for building your credit. The simplest way to improve your credit is to manage your money wisely. The more your discipline your spending habits, the faster you will have your first car, too.
Co-sign the Dotted Line
In some cases, a first-time buyer will need a cosigner to help close the deal. The dealership will offer great promotions for first-time, same-day buyers, but don’t buy into them unless you and your cosigner agree that it is the best option for you.
A cosigner can be a family or friend, and when they cosign, they will usually be the main person on the loan. This means that you can still build your credit, but if you miss a payment, it will affect both of you. This usually means that if you do not have credibility with friends or family, they will not cosign with you. Make sure to treat them well!
Buying Your Vehicle
When you finally have all of your ducks in a row, it’s time to go to a dealership and pick out your first vehicle. It is important to really take your time and do a thorough check of each vehicle that fits your budget.
You will almost certainly have someone breathing down your neck within 5 minutes of wandering down the lot. If you feel uncomfortable with a salesman approaching you, let him know to give you some space. This is very important because his goal is to get a sale. This can lead to you feeling rushed into a decision you do not like.
If you like someone guiding you, then working with a salesman may be a good thing for you. Make sure that you give it a day of research before you buy the vehicle, too. Go online and check out the vehicle. Get a good idea of the market value. Now relate this to the car that you chose. If the price seems fair, then head back to the dealership.
Here is a pro-tip: always say that you are ready to sign that day only for a cheaper price. If they cannot honor that, don’t be afraid of walking away. This is your first car and you have already waited patiently up until now — you can wait a little longer. Once you have chosen your vehicle, it’s time to finance it!
All you really have to do at this point is to let the salesman know that you are ready to move things forward. After you give them your social security number, they will run it to see if you qualify for financing a vehicle.
While it seems daunting, the part where you and the salesman discuss financing is usually quick and easy. If you have a not-so-great credit score, then you might hit a few bumps. Good thing you’ve prepared for that already.
Financing your first car is a learning process, but there are tools and resources to help you out. Remember to always be prepared and to take it nice and easy. Sometimes, bringing a friend or family member along will give you a clear head, too. Now you should have a little more confidence getting that first car financed. Good luck!