Blame it on my age, or the desire to have valuable investments in my life, but I’ve been thinking about buying a car. I’ve narrowed it down to a small-sized SUV. Because I have champagne taste on a not-yet champagne budget, I want it to be either a Mercedes or Range Rover. I realize that buying a car is not a light decision, and when you factor in all the expenses and services that go into a luxury SUV, it can seem like a large task to take on.
Which is why I have been researching first-time car buyer programs for months to discover the details and what I need to do prior to buying my first car.
First off, there are programs set up that allow lenders to purchase with little to no credit history, and this is a godsend. Typically, credit history is heavily looked at when you are applying to buy a car. It is the biggest deciding factor a bank considers when approving a loan. Credit history will let them know what kind of borrower you are, if you pay on time, if you still have loans or debt, and so much more.
There are no hidden secrets when looking at credit. And even if you have a clean record and a good-to-okay credit score, lenders might be hesitant to grant the loan if you have no prior auto loan experience or a limited time working.
So, where can you find a first-time buyer’s program? Many credit unions offer special programs to first-time car buyers and can be discovered through a quick Google search. You could also ask an automaker, who could potentially have special financing for people with limited credit history, including first-time car buyers. The only con is that you can only do the program via a dealership, and through a car that you are purchasing at said dealership.
It’s important to note that if you are thinking of capitalizing on these programs, they might be limited in the pandemic, due to the car shortage going on in the world. But as always, it doesn’t hurt to ask, especially if it aligns well with when you plan to purchase.
We should also note that as a first-time car buyer, you probably lack credit history or have a low score (669 or lower), which could yield to high interest rates on your car, at least in the beginning. But don’t fret, you can still get the loan and then look into refinancing options once you’re a year or two in.
Apart from loan approval and finance options, another benefit of a first-time car program is the ability to adjust your rate with consistent on-time payments. Your interest could drop majorly if you pay on time for the first 12 payments. In addition, most lenders offer 84 months to pay off your loan. Most lenders even take part-time positions as form of employment, granting you greater access to getting a car loan. And lastly, first-time car buyer programs give you the option to have a co-signer.