First Time Car Buyer? Use These Auto Loan Financing Pointers

So, you finally have the wherewithal to get your first car. Hopefully you have a decent down payment and have made a budget regarding the monthly costs of vehicle ownership. Following are some pointers since you are looking to buy your first car and will need some financingDo you have a credit history?Many first time car buyers who need financing, believe it or not, fail to consider that the willingness of a lender to help you own a car is based on your credit rating. Most first time car buyers are young and have a non-existent or very scant credit history. You need to establish your credit. Getting a gas card or a department store card is relatively easy. When you use these cards, pay them off monthly. Never get closer to your spending limit than 50%. If you do this successfully for six months, you will have something substantial enough to convince many lenders that you are an acceptable risk.Can you get a cosigner?If you have no credit history and do not feel you have the time to build one, you may want to consider getting a cosigner. This can be a parent, a relative, or even a friend, but they must have a good credit history. If you default on the loan, it becomes the responsibility of the cosigner. This puts your cosigner at some risk. The cosigner should be fully aware of the liability. Do not betray the trust by defaulting. Successful repayment will get your credit history off to a good start.You need to make some preliminary deliberationsFirst of all, there is nothing wrong with buying a used car. The minute you drive a new car off the lot its value plunges precipitously. Buying a used Toyota Camry or a Honda Accord is actually a recommendation made by many consumer organizations. But, do not expect to get financing for a car more than five years old.Optimally, you should have saved enough to put down 20% of the vehicle purchase price, new or used. This shows lenders you are earnest about paying off the loan. Make a budget so you know exactly how much you can afford for monthly payments. Do not forget to include other costs: Insurance. Gas. Maintenance. Tags. Titles. Taxes. If you are buying a used car from a dealer, make sure there is a guarantee or warranty to protect you from unreasonable failures.Getting the loan requires some shoppingA good rule of thumb is to have your financing in order before you even set foot on a car lot or in a dealer showroom. Used car lot loans are notorious for their loan-shark interest rates. When dealers arrange financing, they do not really have your interest at heart, plus they get a cut, so your loan will end up costing a lot more than if you do it yourself.Approach a bank or a credit union, hopefully one where you have had an account for some time. Credit unions are especially inclined to help young borrowers, especially those who have already started a good credit history as outlined above. When you walk onto a car lot with your financing already approved, your car deal-making is going to be a lot smoother. Never let the dealer know how much you have to spend.Online car loan lenders are available as well. You can even find brokers who will take your preliminary information and do a search for lenders who can best meet your desires regarding interest rates and repayment terms. You can pick among those. As with any online transaction, be sure the site is secure. You might want to check the Better Business Bureau for ratings or customer feedback on the lenders you are considering.Do not forget to have fun. Take lots of test drives!