The following post originally appeared on our RoadLoans blog, The Open Road.
Figuring out how to pay for a new or used car is tough enough, let alone going through the process for the first time, with no credit history or, even more difficult, sketchy or bad credit.
But that doesn’t mean you have no options in financing the purchase of your current dream car.
You just have to be realistic about your objective: In other words, don’t go looking for a hot sports car with the equally hot price tag when your budget and the car loan amount for which you would qualify allows for more of a used compact. That’s a mistake many people make and then end up paying for it in late fees, more credit dings or even repossession – their dream car becomes a financial nightmare.
Instead, take advantage of the lessons learned by first-time buyers who found out the hard way or those with no credit history, sketchy or bad credit, and spare yourself financial misery down the road.
Nicholas Pell at gobankingrates.com and others offer similar advice:
Emphasize your transportation needs over your “wants.” The shiny extras might not be affordable right away to first-time buyers. “The process of purchasing a car is largely the process of winnowing down … to the cars that best suit your wants and needs – but start with the needs,” Pell writes.
Chris Goodman of the Yahoo! Contributor Network helps explain why that is so:
“The first-time buyer will generally have nothing on their credit report, which can be a plus,” especially considering possible negative alternatives. The simple way to overcome possible objections to no credit, unproven credit worthiness or even bad credit is to have a co-signer, Goodman advises.
Getting pre-approved for a car loan can help a lot if you’re a first-time buyer, and lenders such as RoadLoans vary down payment requirements, interest rates and payment terms based on your income and credit history. RoadLoans even provides a secure online application takes just minutes to complete, and you will receive a loan decision in minutes by email. As soon as your loan is approved you can take your loan package to a RoadLoans dealer in your area and start looking for a vehicle.
“You can find lenders who will approve you for no money down car loans, but not as a first-time buyer,” advised Goodman, especially if you are trying to go it alone – without a co-signer. “The larger the down payment, the better odds you have of getting approved without a co-signer.”