Auto Loans - First Time Buyer Car Loan Programs [Auto Loans]
November 23, 2007, 11:17:25

First time auto buyers who do not have established credit can find many great automotive incentives and rebates available to them which are primarily for first time buyers but obtaining auto financing can be a challenge. The first time you purchase a car is the most difficult one in terms of obtaining a loan. Because you have no car loaning history, the car lender has no idea about your financial status and if you can actually pay back the loan. If you like, compare the situation to the scenario in which an unknown person comes and asks you for a money loan.

Because you have not taken a car loan before to prove that you can pay on time, getting a loan it is almost as difficult as seeking one with a bad credit score. However, things were worse 10 years ago, as you could not obtain a car loan without a co-signer. The market is very competitive and the lenders are the ones who try to help first time car buyers. If you buy a car for the first time, it is recommended obtaining the loan through pre-approval.

There are some mistakes people who want a car make. Most people want too much car. It is not uncommon for 18 or 20 year olds to want $30,000 trucks because owning a truck is somewhat of a trend nowadays. The buyer needs to weigh their real needs and then if they have some financial room they can look at various cosmetics which will add to their pride.

Other people believe that the bank will not lend them enough and come to the car dealer with as few as $4000 - $5000 to search for a car. While there are vehicles available in this price range at most auto dealers you should really question your ability to make needed repairs if you experience a mechanical issue.

If you number yourself among the first category of people, imagine how the lender thinks. Even if you do not have many expenses right now, such as rent, utilities, they know that you will have to pay these things during the loan’s life. Because of this, they will not lend you a very large amount of money. They want to lend you money so you can pay them back plus interest, they are not interested in getting the car back if you cannot pay.

The same thing goes for people who restrain too much when buying the car. The lender knows that if you buy a very cheap, bad shaped car, it is more likely that you will spend a lot on mechanic bills and will face difficulties in paying them back. The lender is more interested in giving you money to buy a good car, on which you will only have to do general maintenance.

That is why financial specialists recommend getting a pre-approved the first time you look for a car. By doing this, you will know exactly the amount of money you can afford to spend on a car and will be able to chose the best car for you in that price range.

It is not mandatory to have any money down, as many lenders will approve auto loans for first time buyers without having any money down. But you should know that you can save up to $20 per month for every $1,000 that you have to put down. It is also recommended to have some money down for the initial expenses of the new car, such as the interest on sales tax and the license plate.

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