Riding a new car around the campus must be an obsession for all teenagers, right? Unfortunately, their own pocket is not enough to purchase a new car in cash. When they took a car loan, they never establish any credits yet before. Many lenders only lend money to people with established credit. So, what should they do? Oops, how about telling your obsession to your parents?
If you are the parents who met your teenagers want you to buy a new car for them, and you decided to buy by car loan, first thing you do is encourage you that can afford to pay off in 48 months. You must also pay 20% for down payment on the car to keep from getting upside down, where you owe more on the car than it is worth. If not, leave their obsession for this moment or you’ll break the rule that most every single person who breaks this rule runs into trouble when they trade in their car later.
If you’re a first time buyer for your car loan, then you need establish your credit. Once you establish credit, don’t ever make overspend. You must be responsible and pay on time every month. This might require you to wait another 6 months to a year on the car loan while you go and get your credit established, and build somewhat of a history showing that you pay your monthly revolving credit card bills on time. A good time to do this then would be 6 months before you think you might buy a new car.
It’s fairly easy to get a gas card from your favorite gas station, or a credit card from Target stores. As you do your normal shopping at Target, use your credit card, but pay it off in full each month. Don’t overspend, and never let any balance on any of your credit cards reach the level of 50% of your credit limit. That has a bad effect on your credit score. Then while you are in your 6 month building credit period, you are saving even more money to put down on the car, making your payments less. Patience pays off in the long run.
What lenders look for to approve you for a car loan:
• Documented Monthly income of $1600 or more
• Living in the same address for at least 6 months
• Employed by the same company for 6 months
• Preferably a year of established credit with no black marks
• Credit score of 680 or higher to get lowest prevailing interest rates
• If your credit score is 600 to 680 you’ll pay higher rates like 10%-15% APR
• If your credit score is below 600, it’s very difficult to get approval, and below 550 it is nearly impossible
Don’t Worry with Your Bad Credit Auto Loans | Financial Intelligence says:
[...] loan application meanly you’re in bad credit history. Even you can’t do anything and struggle to fix your bad credit. So, what suppose to do to brake the history and how can you start to have an own mortgage, own new [...]
September 14th, 2009 at 5:52 pm
Awesome man! I posted some comments before anyway, because a lot of your stuff is really awesome.
October 10th, 2009 at 5:08 pm