First Time Car Buyer With No Credit History

First Time Car Buyer With No Credit History – The time has finally come: you’re ready to kick your bum to the curb and buy your first car. But before you run to the dealership, let your engines cool down long enough to make a plan. These tips to know before buying a car will help ensure you get the car you want at a price you can afford.

The first step when buying a car is to set a budget. This will help you narrow down your focus on cars within your price range before you fall in love with one that blows your mind.

First Time Car Buyer With No Credit History

To create a budget, start by adding up all of your monthly income and all of your monthly expenses. Be sure to categorize your expenses as fixed (rent, utility payments or student loans) or discretionary (eating out or buying new clothes). Once you have an accurate idea of ​​your expenses, you can see some areas where you can cut back, saving more money on your monthly car payment.

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In general, it’s best to keep your car payment below 10% of your monthly car salary. But your monthly payment isn’t the only thing to consider when budgeting for a car. You also need to consider the ongoing costs of owning a car, such as insurance, gas, repairs and maintenance.

Loan terms are another factor to consider. Car loan terms usually range from 36 to 84 months. The longer the loan term, the lower your monthly payment, but the more interest you’ll pay over time. By choosing a cheaper car and making a higher down payment, you can choose a shorter loan term and manage your payments.

Once you have an idea of ​​your budget, do some research to see which cars in your price range fit your needs. Online research at local dealer websites or automotive sites like Edmunds.com, Autotrader or Kelly Blue Book can give you a good idea of ​​what you can expect to pay.

As you do this research you will be tempted by the best car rental deals. Many drivers prefer to own their own vehicle, but leasing has many attractive advantages. After all, you get a brand new car, usually for a lower down payment and monthly payment compared to buying. However, restrictions can be restrictive and you may refuse to put money into the car, eventually having to return it. Ultimately, it’s a decision that depends on your preferences and needs.

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Once you’ve narrowed down your list of dream cars, it’s time to think about how you’ll finance the purchase. If you don’t have enough money saved up to buy a car outright, you’ll need a car loan to pay for the purchase. According to the State of the Automotive Finance Market in the fourth quarter of 2019, 84.6% of new cars and 54.6% of used cars were financed.

You can get financing through a car dealer or through a third party such as a bank or credit union. However, since car dealers pay an additional fee to process the loan, you may be able to get better terms at a bank or credit union. Getting pre-approved for a loan from a third-party lender can also give you negotiating leverage to see if the seller will honor the terms of the loan.

If you are applying to multiple lenders to get better loan terms, make sure you apply to all of them in a short period of time. Applications submitted within 14 to 45 days (depending on the scoring model) will only be treated as a hard inquiry in your credit scheme. Once approved, the lender will provide you with proof of loan terms and amount to show the seller.

When it comes time to shop, your options for what to do and how to do it are greater than ever. Depending on whether you are looking for a new or used car, you can shop from dealers, dealer websites, online car buying sites, or private sellers. Some services bring your car to your door.

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Knowing your credit score before you apply for a mortgage will give you an idea of ​​what loan terms you may qualify for. Start by getting a copy of your credit report and checking that it is correct. Then check your credit score.

700 or more) makes it easy to get favorable loan terms. Consumers with high credit scores pay an average of $522 per month to finance a new car, while those with low scores pay an average of $562, a difference of $40 per month, according to the data.

If your credit score isn’t in this range and you don’t need a car right away, consider delaying your purchase. In the meantime, you can work to improve your credit score and access low-interest loans, which will save you money.

To improve your credit score, pay all your bills on time, pay off your debt, and lower your credit utilization ratio. If you want to boost your credit score quickly, consider Boost

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How big should a car deposit be? As with buying a home, most lenders want to see a down payment of at least 20% of the car’s value. (If you are buying a used car from an authorized service center, a 10% down payment is usually sufficient.)

Many dealerships, car and automaker websites have online payment calculators to help you get the best down payment. By considering different car prices and loan terms, you can estimate how different payment rates might affect your monthly payment and the amount of interest you pay.

Have your heart set on a shiny new car? You might be surprised how much that new car smell is costing you. According to the data, the average monthly payment for a new car is $161 higher than the average monthly payment for a used car ($554 vs. $393).

Buying a used car is a great option for first-time car buyers on a budget. Cars less than five years old usually have the same safety features and technical bells and whistles as newer models, but at a lower price. If a five-year-old car is too “vintage” for you, look to dealers who sell two- to three-year-old cars on lease.

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You can buy used cars from car dealers or private sellers. Many car dealers and manufacturers sell “certified pre-owned” (CPO) cars. These are inspected and refurbished used cars; They usually come with limited warranties and the like. When purchasing a CPO vehicle, make sure you fully understand whether the vehicle is under warranty and, if so, what it covers.

Whether you’re buying a used car from someone you know or from a dealership, you should always have it inspected by a trusted mechanic. This is called a pre-purchase inspection and is a service offered by many garages. You may have to pay a few hundred dollars for this service, but it’s money well spent if it keeps you from buying a car with major problems under the hood.

A CPO must also inspect the car independently before purchase. CPO audits often focus on large projects and obvious problems. Independent mechanics can point out minor problems, shoddy repairs, and potential future problems. After the vehicle is inspected by the dealer, obtain a written inspection report to give to your mechanic.

To find a mechanic, ask your friends and family for recommendations or check online review sites for top-rated mechanics in your area. Mobile mechanics who come to you to inspect the car may also be an option, but taking it to a garage allows the mechanic to do a thorough inspection. If the seller refuses an independent inspection, consider this a red flag.

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Dealers and private sellers expect you to be satisfied with the price of the car. You have more wiggle room with a used car because it doesn’t have a set MSRP (manufacturer’s suggested retail price). Even with a new car, significant savings can be negotiated on the sticker price.

If you want to get a tough deal, find out how much the car is worth by researching its value on car websites. Be sure to consider any “goodies” the car has, such as leather seats or an advanced entertainment system. When you arrive at an estimated price, take a discount of 10% to 20% of that amount and make an offer to the seller. You have more leverage if your loan is pre-approved or if you pay in cash.

Timing will help you get the best deal. If you’re buying new and don’t need the car right away, try waiting until the last months of the year to buy. This happens when sellers usually offer special incentives like cash back or promotions

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