Getting an Auto Loan For Your First Car

Getting an Auto Loan For Your First Car
So, you are a young person who has decided to purchase your first car? Congratulations! You are probably making the first really big purchase of your life, and you may be a little nervous about it all, especially if you are not sure what to do about the financing.

Since you are young, you probably don't have too much of a credit history, so you are correct to be a little concerned. That is, unless you are really lucky and have enough money saved to go and pay cash in full for a car! Most of us were not quite that lucky when we purchased our first nice car.

Anyone who knows that they are going to want to buy a car, and also realizes that they can't come up with the cash needed for such a big purchase would do well to plan in advance by already having their credit established. In fact, it would be smart to have a credit history established at least a year before you even start to look for a car.

You want to be able to show the world and the lender, of course, that you are a financially responsible and adept adult. Your credit history is the first thing that a lender will look at when you get ready to get a car loan. You might say in answer to this that you know several people whose credit isn't all that good who have had no trouble getting a car loan. That may be true, but ask those friends how much money in finance charges they have to pay out every month in order to get that loan!

The best way to start building your credit is certainly not to go and get a credit card or two and charge away! Instead, start off small. Get yourself a checking account, and use it! If you don't keep up with a checking account, and carelessly begin to bounce checks right and left, you will get hit with overdrafts and their charges as well. A checking account that has been well handling shows that you do indeed now how to handle money.

If you have a job, see if you can have your paychecks deposited automatically into your checking account. This will show a lender that you have an income that is consistent.

And, having your money go right to the bank is a good idea for another reason. It will help you to put money aside for the down payment on your car. Saving a little each time you get paid may not seem like much, but it certainly will add up over time! A down payment will keep the amount that you need to finance as low as possible. You'll also look quite competent to any lender when you have a down payment, too.

Another way that your bank can help you is to give you the okay to take out a small loan with them well before you are ready to go forward and purchase your first car. Paying the loan back in full with regular, on time payments will go a long way toward building up your credit record.

Your reward for all of this is not just the car of your dreams, but a great interest rate on your first car loan. You will be very pleased with yourself when you realize how much money a little planning in advance has saved you.