Things to remember for first time auto loan applicants
When you are applying for your first auto loan, there is no guarantee that you will get approved. There are quite a few things you need to watch out for. The fact of the matter is if you're a first time borrower, lenders don't trust you just as much they don't trust people with bad credit. While getting a car loan was almost impossible for such people without a co-signer ten years ago, nowadays if you make all the right moves, it will be a piece of cake. One of the easiest ways for you to do this is by getting pre-approved. That's right, when you have an auto loan already approved before going to buy your car, you will not only have much more confidence but will also be able to negotiate better with the dealer.
When it comes to your first auto loan in Phoenix, the biggest misconception that most people have is that lenders are more than happy to repossess your car. The truth is they aren't. They would be a lot happier if you could pay all your installments on time. This is why, pre-approval is great as you'll know how much lenders are willing to loan you and you can find a car that is within that price range.
Of course, if you can add a co-signer into the mix your options increase significantly. In such situations, it will basically be the co-signers credit score which is used to give you a loan. So you could get a much larger amount and may even get a lower interest rate and longer repayment period. The only negative thing here is that if you can't repay the loan for any reason, the co-signer will be forced to pay on your behalf. Are you sure you want that?
Apart from including a co-signer, there are a few other things you can do to try and increase your chances of getting approved and of getting a better deal:
1. Since you do not have a credit score, your monthly income is going to be the determining factor for your auto loan. It is important that you ensure your monthly payments don't work out to an amount which is higher than what you can afford.
2. Even though you might want to check your options before making a decision, if you are getting a loan without a co-signer, you should just go with it. The chances of another lender offering you a better deal are close to none as most lenders deal with first time borrowers in pretty much the same fashion. So don't waste your time looking for a better offer.
At the end of the day, this is going to be the first major purchase of your life and you need everything to be perfect. That's why it is important for you to visit multiple dealers and see multiple cars before making a decision. Remember, you will be stuck paying for the same car for at least the next three or four years. Better make it worth it.
When it comes to your first auto loan in Phoenix, the biggest misconception that most people have is that lenders are more than happy to repossess your car. The truth is they aren't. They would be a lot happier if you could pay all your installments on time. This is why, pre-approval is great as you'll know how much lenders are willing to loan you and you can find a car that is within that price range.
Of course, if you can add a co-signer into the mix your options increase significantly. In such situations, it will basically be the co-signers credit score which is used to give you a loan. So you could get a much larger amount and may even get a lower interest rate and longer repayment period. The only negative thing here is that if you can't repay the loan for any reason, the co-signer will be forced to pay on your behalf. Are you sure you want that?
Apart from including a co-signer, there are a few other things you can do to try and increase your chances of getting approved and of getting a better deal:
1. Since you do not have a credit score, your monthly income is going to be the determining factor for your auto loan. It is important that you ensure your monthly payments don't work out to an amount which is higher than what you can afford.
2. Even though you might want to check your options before making a decision, if you are getting a loan without a co-signer, you should just go with it. The chances of another lender offering you a better deal are close to none as most lenders deal with first time borrowers in pretty much the same fashion. So don't waste your time looking for a better offer.
At the end of the day, this is going to be the first major purchase of your life and you need everything to be perfect. That's why it is important for you to visit multiple dealers and see multiple cars before making a decision. Remember, you will be stuck paying for the same car for at least the next three or four years. Better make it worth it.