If you have never had an auto loan or have limited credit you may be considered a first time auto loan buyer. Many first time buyers, have no experience in car shopping. This can make matters difficult because most dealers cannot help a first time buyer get the car loan they are looking for. Car dealers are limited by the lender programs they have and their knowledge of them. Since most car dealers deal with prime finance they don’t know how to get a first time buyer a loan. In order to get a loan as a first time buyer, you will need to understand how an auto loan works. First off, each lender has programs that are a little different. If you have found a dealer that has a first time buyer program, you should know what lenders look for to see if they would like to approve your loan.
- Lenders will look at your income to determine you maximum monthly payment. If you have perfect established credit they will usually allow around 18% of your monthly income. Usually they will calculate this by dividing your year to date income by the amount of time that has past in the year. Some lenders will allow you to use your current paycheck as an indicator for your total income. In this instance, it may be beneficial to pick up all of your hours to show your full income.
- Lenders may look at job time. If you are thinking about changing jobs soon, you may consider staying until you get financed as longer job time will score better than a brand new job.
- Lender will look at your total debt. If you owe money on credit cards, try to pay these down or off as a high debt ratio is almost always a red flag.
- Lenders may look at time at current address. If you were thing you would like to move, hold off until you get financed.
- Finally, try to save up for you down payment. If you can put a thousand or two down on your car purchase, you will be much more likely to get the loan you seek.
If you need a car and have very little credit you should find a dealer that has a first time buyer program. New Start Auto Loans has a network of dealers that have special programs for a variety of different credit situations.
