Hey! You’re buying your first vehicle! Congratulations! This is such an exciting time and we’re excited for you.
Along with that excitement, naturally, comes a lot of questions. Relax. It’s perfectly normal to wonder if you’ll be able to get financed as someone with little to no credit history. You might also be wondering what kind of financing options are out there for first-time buyers. No problem.
This is where we come in and we’re happy to help.
How to finance your first vehicle purchase
Work out what you can afford
Budgets. Let’s face it, they’re not as exciting as buying a car. But they are a great tool for making sure you stay on track each month and still have money left over for the fun stuff.
Who doesn’t like having money to go out with friends, do some shopping and have a night out on the town every now and then, right?
When creating your first budget, start simple. (You can always get more in-depth as you gain more experience.) Include things you pay for on a monthly basis – rent, utilities and your phone. Then add in what you expect to spend on food.
Don’t forget to “pay yourself.” This means putting a little away for savings. Whether you have a savings account or another means of saving for a rainy day (this is something besides a 401k or other retirement account), make sure you account for that each month, too.
Now, you’re ready to add vehicle expenses to your budget! In addition to your monthly payment, you’ll need to make room for insurance, maintenance and fuel.
Are you still with us? Whew. That was a lot, right? Thanks for sticking it out. It gets better from here.
Save for a down payment
Having made a budget, it’ll probably feel good to be more in control of your finances. You may feel even better if that planning lets you save for a down payment.
Having a chunk of money to put down on a car could make it easier to get financing and, if you can get a loan, offer other advantages. You might be able to score a better interest rate or a larger loan that gives you more vehicles to choose from.
Consider a co-applicant
While we understand that buying your first vehicle is a major milestone, and likely something you really want to do on your own, it might be in your best interest to consider a co-applicant. A parent, grandparent or spouse with steady income and good credit can help in several ways.
We’ve already seen how a down payment might help. A co-applicant may give you a hand in getting a loan, a higher loan amount or a lower rate, too. Of course, all of this is dependent on your co-applicant’s income and credit history as well.
As we said, it’s just something to keep in mind, should the need arise.
See if you pre-qualify
Next, it’s time to see if you pre-qualify for financing.
What does pre-qualify mean? Pre-qualification is a step that gives you a good idea of whether you can get a loan and the type of offer you might get before you go to the dealership. And it has no impact on your credit score.
At Drive®, you can find out if you pre-qualify in just a couple of minutes – all we ask for are some basic details. If you pre-qualify, you can then see real rates and payments for cars so you can start shopping with confidence and easily find vehicles that fit your budget.
Your way to what’s next
Purchasing your own vehicle is a special time, but the benefits of financing for a first-time buyer go beyond getting your own set of wheels. Making timely payments on your loan could also help you to build credit and improve your financial health for any major purchases you make in the future.
