How to get Car Financing for First Time Buyers
For many first time automobile buyers, getting their first vehicle can be a memorable and exciting experience. However buyers should be prepared and know the ropes before attempting to attain first time car buyer financing. Becoming knowledgeable about the financing process and the first time car buyer loans available, is an essential step to take before heading out and viewing vehicles. Before getting started in this process, potential buyers should consider their credit history, amount of available down payment as well as how much a monthly payment they might be able to afford. Knowing these factors are vital in determining the price range of the vehicle you are looking for and ensuring that you will end up with a vehicle that is affordable.
Auto financing terms to get familiar with
Annual Percentage Rate (APR)- The Annual percentage rate is the annual yearly cost of interest and all other fees associated with the purchase of your vehicle expressed as a percentage. Clearly, the lower the APR you receive the better deal you are getting. Many factors can go into determining the APR including dealer specials, Credit score, down payment and loan term.
Loan Term- This is the length of your car loan expressed most commonly in the amount of months you must continue making payments before the loan is paid in full. The term can vary depending on each individual’s situation and it is important to determine how long you want to take on the financial burden of an auto loan before signing up.
Credit Score- Your credit score is a rating expressing your own personal credit worthiness. Young buyers who do not have an established credit history and yet want to purchase their first automobile often are worried that this factor will cause denial for their car loan application, however other factors such as employment, income and the availability of a co-signer on the loan can often times help overcome the lack of credit history. Your credit score rates how you have done in the past in paying your creditors on time and in full. It can take years to build a strong credit score and only a few missed payments to destroy it. Maintaining timely payments on your debts and not taking on too much debt is vital in maintaining a strong credit score.
Down payment- This is the amount of money that you will be paying up front to purchase your vehicle. These requirements for this number can vary dramatically based on a myriad of factors. Lower credit scores may require a higher down payment in certain cases. There are also many 0 down offers by dealerships, offering credit worth buyers the option of paying nothing upon purchase. This figure should be considered with care as your monthly payment will vary based on the amount of money paid up front and what is left to be financed.
Rebate- Many dealerships may offer what is known as a rebate on select models. This is an offering from the manufacturer to encourage the sale of certain models and is used to incentivize buyers into purchasing this particular model.