Most first cars are given to us, often hand me downs from mom or dad, grandparents or a distant uncle. They serve the purpose of getting us where we need to go when we’re young, and represent a badge of freedom. There will come a time when either that gifted car can go no more, or you find find yourself ready to buy your own car.
You’ll need a few key things to be able to buy a car on your own: money, a job and credit. Most people would suggest saving a few thousand dollars as a downpayment on the first car you buy. The more you put down, the more you will decrease the monthly payment owed. You also need to seriously consider your budget when it comes to car buying. Of course driving a brand new Mercedes-Benz off the car lot would be a dream come true. But, that scenario probably isn’t likely for most car buyers. It’s imperative to be practical so that you don’t launch yourself into financial ruin on your first big ticket purchase. You can research different types of cars and the price points that come along with them at Cars.com. Carefully consider your income and monthly budget before deciding just how much car you can afford.
Aside from down payment funds, any lending institution that’s willing to loan you money to buy a car will want to see that you’re gainfully employed for an extended period of time. You’ll prove this by providing previous years tax returns and paycheck stubs from your employer. The institution will call your employer too, just to verify that you still work there.
Credit is the biggest factor in buying expensive items. Most people can’t pay cash for big purchases and use banks to borrow money to pay for them. To do this, you’ll need to show a credit history. Many young people don’t really have a well established credit history yet. Some liberal lenders might take a chance on you anyway if you’re willing to pay a little bit more in interest on the car loan. Other banks won’t touch you with a cosigner. A cosigner is someone who has well established credit and who signs with you on the loan. They promise that if you fail to pay the loan back, they will. This is a lot to ask of someone, so if you need a cosigner, be sure that you take care of your obligations so they don’t have to.