First Time Auto Loans

Get the Best Approvals
for Buying Your First Car

First time auto loans can be a bit tricky to get approved for if you are trying to find financing on your own and/or if you are working with a car dealership that does not specialize in these types of loans.

If you are a first time car buyer it's important to note that getting approved for an auto loan can be more difficult than getting approved for a home loan.

The frustrating part is if you're looking in the wrong places for approvals and it's resulting in turn down after turn down...Very discouraging, but...

Don't despair...There is hope!

If you are a first time car buyer, which you will most likely be unless you've paid cash for your previous car(s), there are some things that you'll want to know to expect and some things you'll want to watch for.

What you'll find below:

Four Levels of A First Time Car Buyers Credit
Will You Need A Co-Signer When Buying Your First Car?
Will You Need Down Payment When Buying Your First Car?
Where to Apply For First Time Auto Loans

Buying Your First Car? We Can Help!
Loans for Buying Your First Car - Auto Credit Express�

Keep In Mind...
Before we get started here I'd like to ask that you please keep in mind that there are auto lenders out there that approve absolutely all types of credit.

Whether it's first time auto loans or some other no credit / bad credit loan you are looking for these lenders are out there and they're eagerly awaiting to loan you money.

I say this, because I will mention below that some situations below are tougher than others, but remember that they are certainly not impossible.

How’s your credit score? 0-600 Poor, 601-680 Fair, 700-774 Good,
775+ Excellent. Find out your Score now FREE with enrollment!

Four Levels of A
First Time Car Buyers Credit

I've found that first time car buyers will usually fall within one of the following four credit levels:

1. A Ghost

No. This doesn't meant that your credit is scary, but it means that you have an absolutely blank credit file.

There are no good accounts reporting and no bad accounts reporting, there is simply nothing. This is the type of credit most people think of for first time auto loans.

If you are in this credit situation you'll find that most prime lenders will not be interested in loaning to you right out the gate.

You'll need to prove to these lenders over time that your intentions are good and that you pay your bills on time.

It is sometimes possible to have a credit union approve you in this credit situation and your finance rate will typically fall in the middle of the road...12-15%.^oac

To get approved with a credit union, they are usually going to want to see:

Good job time, like 18 months or better.
Decent down payment $2,000 or more.
Smaller loan $6,000 to $10,000.
Shorter finance term, like 48 months or less with a 60 month maximum.

2. A Ghost With Derog

Derog is short for derogatory. In this case it means derogatory credit and is reflected on your credit file as collection accounts and/or account chargeoffs.

This is not a great situation to be in and most people I've seen in this credit situation don't even realize that they have negative accounts reporting. This is the most difficult of situations to be in when applying for first time auto loans.

Do yourself a favor before you begin applying for your auto loan and check your credit for inaccuracies and/or legitimate collections that you may want to pay off. This will save you from unnecessary credit inquiries and potentially unnecessary turn downs.

Oftentimes the collections are from:

Medical collections
Cell phone companies
Utility companies
Court judgments
Tax liens, etc.

They are not usually from companies that you have applied for credit from like credit cards, auto loans, etc. and this is why you may not even know they exist.

It is well worth it to clean these items up before applying for credit and I'd suggest reading my Collection Removal article before you do.

If you don't want to clean these up, or don't have the time to wait for these to get cleaned up, that of course is OK and you can still get approved, but it may limit your options.

This means you may have to put more money down, buy less car and/or pay a higher finance charge.

3. Limited Credit, No Installment Loans

This is not a terrible spot to be in and certainly helps with getting you approved through a local credit union for your first time auto loans.

You may have a couple of small credit cards that you've had for 6-18 months and may even have some very small medical collections, etc.

Credit unions will still look for things like:

Good job time, like 18 months or better.
Decent down payment $1,000 to $2,000 or more.
Smaller loan $8,000 to $12,000.
Shorter finance term, like 60 months or less with a 72 month maximum.

Even though they are looking for similar things as a "Ghost" your chances for approval are much greater.

4. Long History, But All Revolving

I typically see this credit situation with customers from 50 years young and up. These are typically the easiest first time auto loans to get approved.

Usually, any auto loan credit they have had was over seven years ago and the loan company has stopped reporting to the credit bureaus, or they have always paid cash for their cars.

So even though you may be in this category and have financed cars before, it's been so long that you are no longer receiving credit for these loans and you would be considered a first time car buyer.

This actually reminds me of a couple I met with recently that were in their 70's and had a very long credit history, but it was all credit cards.

Their credit scores were excellent and in the upper 700's, but I had received multiple turn downs from my prime lenders due to a lack of installment credit (auto loans, mortgage).

I was eventually able to get them approved, at a prime rate, with a local credit union, but this just goes to show that credit score isn't everything and credit depth plays an important role.

Check your Credit Score - Fast, Free & Easy at CreditReport.com.

Will You Need A Co-Signer
When Buying Your First Car?

Simple answer...No!