First Time Car Buyer
Auto Loans, Insurance and More...
My question is if you could tell me where to start looking for cars and auto loans. I have been looking on the Internet, but I think I have been looking too much over my head. I am wondering if you could give me some car buying tips like where to look and around how much auto insurance rates would be.
Here is some information about me that can help you determine this...
I am 18 I have a wife and a baby my wife is 19 and my baby is 11 months we both have no credit and I am looking to buy a used car. I have a good job and I have been there for 11 months. I make a little more than 2,000 a month. We have an apt and we have been here for about 6 months now. I also have 5,000 to put down in cash and I have no car to trade in.
Thanks for this great website and you are really a life saver.
I'd suggest starting out by getting an approval for an auto loan first. This will help you to sort of back into the amount of car you can buy. Based on what you've told me you may want to try a local credit union for your approval. They should love your $5000 down payment.
Unfortunately, being a first time car buyer, they may want a cosigner if you're credit is limited or nonexistent, but that will vary from credit union to credit union.
This is where you're large down payment may help you out a lot though and they may be willing to give you a smaller auto loan on your own, because you are showing them (with your down payment) a strong commitment to the vehicle.
Your time at your job may also hurt a bit, because most credit unions want to see 18-24 months on the job for a first time car buyer. Again, this will vary from credit union to credit union.
Review Your Credit
If you haven't checked your credit I'd highly recommend doing so prior to applying. If you have any collections (there may be some you don't even know of, medical is the most common), then you'll definitely want to clean those up ahead of time.
You can get a copy of your Get your Credit Score at CreditReport.com!
If you do have any collections that need to be cleaned up I'd highly recommend reading my Collection Removed page, because you'll definitely want them completely removed once paid.
Credit Union First Time Car Buyer Loan Program
If a credit union were to approve you under a first time car buyer loan program, then you'd probably get approved in the 6-10k range and could probably expect to be somewhere in the mid teens for an interest rate.
If you have no luck with a local credit union, then you may have to find a dealership that specializes in first time car buyer loans.
Dealerships that specialize in first time car buyer loans will have many more resources for an approval and should be able to get you approved, but your interest rates will probably be a bit higher.
The best source I've found to find dealers like this in your local area is Auto Credit Express, they are very big and their service has sourced over 1 Billion dollars in loans online. Apply here Auto Loans - Fast Approvals, Competitive Rates.
Just based on what you've told me I can think of 3 different lenders I'd more than likely be able to get you approved with. Of course, I'm not in TX anymore, so you'll have to find a local dealership to help you out.
I cover quite a bit more information on my Bad Credit Auto Loans page that should be able to give you more information regarding non prime loans and even first time car buyer loans.
Buy Here Pay Here
Your next option would be to buy from a buy here pay here dealership. Buy here pay here dealers, act as not just the dealership, but are the lender as well.
Auto insurance rates are a tough one for me to nail down, because there are many factors involved. Have you been insured before? What's your past driving record? What kind of car are you buying? What will the car be used for? How many miles do you drive each year? And on and on and on...
My suggestion would be to get some insurance quotes (they are free) for a generic vehicle that you think you may be buying. For instance get a quote for a 2005 Nissan Altima and/or a 2006 Chevy Impala, etc. Again, auto insurance quotes should be free and won't negatively impact your credit, so don't hesitate to get a quote(s).
Take a look at www.Auto-Insurance-Helper.com. You can learn about insurance for a first time car buyer and can get multiple Car Insurance Quotes free.
Some Key Points to Consider
One key here as a first time car buyer is to not get in over your head, which you seem to already know to watch out for. I can't stress this enough though, because building a solid credit history will be so important to you down the road.
You may not get your dream car this first go around, but that's okay because you want to use this first buy as a stepping stone. This does not mean you have to settle for a junk car, but I wouldn't go out and expect to get a new Camaro for $250 a month, or for that matter go out and buy a new Camaro for $800 a month.
Speaking of monthly payments I'd also suggest you try and stay comfortably below $250 a month. Since this will be your first purchase those monthly payments can take some getting used to and if you strap yourself to a $350 payment it will hurt each month when you write that check.
Based on your income a lender may approve you for 15%-20% (possibly even more) of your monthly income ($300-$400 a month), but I'd be real careful maxing yourself out!
I hope this helps you out and if you've got any more questions please don't hesitate to ask.
Good luck to you,