Getting your first car loan can be difficult, especially for young adults with little to no credit. Deciding which car loan is right for you can be tough and depends on a couple of factors. Do you have a job you can show paychecks on? How is your credit history? Websites like creditkarma.com can give you your credit score. If you don’t understand credit scores, don’t worry, they are intimidating and confusing at first. Attend a credit score seminar at Michigan First credit union to learn about credit scores and get your credit score for free!
Make sure you do proper research to ensure you’re confident on what car loans are all about. Be sure to understand all the terms of the loan. When financing a car, get the shortest term you can afford. Having a shorter term will in turn give you higher monthly payments but lower interest rates. This beats having lower monthly payments and paying more than you have to in interest. Save up as much money as possible so you can put down as much as you can, this will also save you money in interest in the long run. Another tip is to pay for all the taxes, fees and “extras” in cash so you don’t increase the amount of your loan.
Shop around and find the best rates. Remember that used cars are always cheaper, and a new car isn’t always the best way to go, especially financially. Buying a new car is generally not a good idea because it depreciates greatly as soon as you drive it off the lot. A lightly used vehicle is the better option. If you’re under 18, you will need a parent to cosign for you. Be confident that you can afford not only the monthly payments, but also insurance, gas and maintenance fees.
Drive safe, young, and free