How To Get A Car Loan With Credit And Non Credit
Hey Everyone It'S Trootop Here And In Today'S Article We're Going To Talk About People That Are A First-Time Buyer With A Car Or They Just Don'T Have Any Credit History So They'Re Also First-Time Buyer, But I'm Going To Get Into These Two Situations And What I Mean By First-Time Buyers Someone That Has Credit But Has Never Had An Auto Loan Before And Then Obviously Talking About People That Just Don'T Have Any Credit History At All And I'll First Answer The Question Of If You Can Get A Loan. Yes You Can Get An Auto Loan And I'll Kind Of Give My Advice On All That Throughout The Article.
But In The First Part Trootop Going To Talk About People To Have No Credit History At All In Kind Of That Whole Situation And Then In The Second Part I'm Going To Talk About People That Do Have Credit History, But They've Never Had An Auto Loan And Then We're Going To Wrap Things Up With Any Leftover Parts Or Tips And Advice. That Kind Of Can Go Over Both Parties So Let'S Get Into The Article. Some Things That I'm Going To Kind Of Meld Together At The End Of This Article, So In This Part I'm Basically Just Gonna Describe What A Ghost Is And A Lot Of Stipulations, So First Off A Ghost Like I Said If Someone Who Has No Credit History At All And That'S What Lenders And Dealerships Will Call It Is A Ghost Because You Don'T Exist Right From A Credit Standpoint And It'S A Negative Thing From The Sense That They Have Nothing To Base You Off Of So They Don't Know If They Can Trust You For A Loan It'S A Positive Thing Because You Haven'T Had A Chance To Screw Up Yet On A Credit Standpoint So You Don'T Have Any Negative Things Going Against You That Being Said Though There Are A Ton Of Stipulations From Lenders For Ghosts Typically Now What It Usually Is Is The Car Has To Be A New Enough Vehicle That'S One Of The Stipulations For Most Lenders I Had Lenders That Would Maybe Go Into Ten Years. Some Lenders Would Only Go Out To Seven Years Old Someone Do Five Someone Will We Do Three Years Old So Just Depending On The Particular Lender They'Re Always Going To Set A Range And The Reason They'Re Doing That Is They'Re Thinking That If You Buy A Newer Car The Chances Of Something Breaking Down On It Are Gonna Be Less So Then You'Re Gonna Make Your Car Payment Because You'Re Not Going To Not Make Your Car Payment Because You Have To Fix Your Car And All That Kind Of Stuff Right They They Look At That Right The Next Thing Is Mileage Lenders Will Typically Have Mileage Restrictions For People To Have No Credit When They Are Getting Their First Auto Loan Usually They Want It To Be Under A Hundred Thousand Miles At Least Some Lenders Are Even Stricter Where They'Re Like You Can'T Have Above Forty Thousand Miles I'Ve Seen It So Just Figure Out That Program With A Particular Lender As Well And Understand That You'Re Gonna Have To Buy A Newer Car That'S Lower Miles Which Sounds Nice But The Next Part Kind Of Makes Things Difficult They Have Money Restrictions On It And The First One Is Going To Be Pretty Obvious It'S Just Based On Your Income Most Lenders Again It'S Varies Lender Lender Will Have A Percentage Based That They Will Loan You Out In Terms Of A Monthly Obligation Or A Monthly Payment On Your Income So Some Letters Will Only Do 5% Some Will Go Up To 10% Some Will Even Go Up To 15% Of Your Monthly Income And This Is Gross Monthly Income By The Way In Terms Of A Car Payment Now That Means That If You For Example Only Make $1,000 A Month Well Just Take Let'S Say 10% Of $1,000 A Month That Means You Can Only Afford $100 A Month Car Payment Or If They Go Up To 15% You Can Only Afford $150 A Month Car Payment So Understand That If Your Income Is Extremely Low It Can Be Pretty Difficult To Just Get An Auto Loan Because It'S Hard To Find Cars That Have A Payment That Is That Low That Fall Under All The Other Criteria And Then The Next Thing Is Just Gonna Do The Actual Money Amount Now Sometimes There Are Circumstances Where If Someone Has A Really High Income And They'Ve Got A Lot Of Money Down Lenders Will Kind Of Be Flexible But For The Most Part They Don'T Want To Loan You Out More Than $15,000 And A Lot Of Lenders It'Ll Be Even Less Than That When I Was A First-Time Buyer Now This Is Going To Be More On The Second Section Because I Did Have Some Credit History I Was Able To Get A Loan Of About $15,000 For My First Auto Loan And That'S What I'Ve Seen Typically Be The Top For Most People To Have Absolutely No Credit History At All Most Some Will Be Even Less They'Ll Be 10 To 12 Thousand Dollars And Some Ofthem They Won'T Even Go Above $6,000 For An Auto Loan So You Can See How That Can Make Things Extremely Difficult For You For Finding A Car Because You'Re Like Okay I Have To Find A Car That Is New And Has Low Enough Miles And It'S Inexpensive Enough That I Can Get A Loan On It And It Can Basically Dwindle Down Your Options To A Very Select Amount Of Cars So It Can Make Things Difficult If You Have No Credit History So Those Are Typically These Stipulations For A Ghost And Then Obviously The Last Thing Is Some Letters Will Require Money Down And This Can Vary Lender To Lender Some Of Them They'Ll Say You Don'T Need Any Money Down Some Of Them Say You Need 20% Down It Just Depends On The Particular Lender So Understand That You Might Have To Come With Money Out Of Pocket To Get The Auto Loan Now This Next Section Is Going To Be On People That Are First Time Car Buyers And What I Mean Is Someone That Has Never Had An Auto Loan Before However They Do Have Credit History And There'S A Very Wide Spectrum Of People That Fall Under This Category Starting From Someone In My Situation Years In The Past Where I Had A Bunch Of Credit Cards That I Had Used Or I Shouldn'T Say A Bunch I Had One Credit Card That I Had Used Every Single Month So I Actually Had A Really High Credit Score But My Credit History Was Very Thin And So I Still Had A Credit Score When I Got My Auto Loan But Because When I Got My First Auto Loan I Was Considered A First-Time Buyer I Had A Limit On That Auto Loan
The Maximum Amount They Would Loan Me Out Was $15,000 And I Needed To Actually Find A Car That Was Less Than A Hundred Thousand Miles They Didn'T Give Me A Year Restriction The Lender That I Went Through At That Time Didn'T Have A Year Restriction Which I Thought Was Pretty Cool So I Ended Up Getting A Little Bit Of An Older Car But Yeah There Definitely Are Restrictions For First-Time Buyers But It Depends On The Situation So The First Situation Is Someone Who Has Never Had An Auto Loan Obviously And That'S Gonna Be All These People But Who Has Really Bad Credit This Is The Hardest Probably In Terms Of A Just Credit Approval Situation To Get Done Because One You Haven't Proven To A Lender That You Can Make Payments On A Car And Then Two You Have Proven To A Lender That You'Re Not Good At Making Payments On Other Things And So From Their Viewpoint They Don'T Really Want To Loan You Out Money Because Then They Go This Person'S High At Risk They'Re Gonna Default On Our Car Payment We're Gonna Have To Repo It We're Possibly Going To Lose Money All That Kind Of Stuff Right That'S What They'Re Thinking And So That'S Kind Of Like The First Part Of These Spectrums People Have Bad Credit If You'Re In This Spectrum Where You'D Never Have Had An Auto Loan And You Have Bad Credit History Prepare For A Couple Things Typically You Will Need To Come With A Lot Of Proof Of Income Just To Get Approved On Something Like This Money Down Is Definitely Going To Be A Thing And Potentially You'Re Gonna Need To Have A Cosigner As Well That Actually Has Good Credit Just That You Can Get A Proof For An Auto Loan And The Restrictions Are Gonna Be Super Strict Typically People That Are Like This They Will Make It So That It'S A Very Strict Money Amount Mileage Amount Year For The Car All That Kind Of Stuff Like Everything I'Ve Talked About In The First Part Of The Article But Kind Of Even Stricter Then The Next Year Is Like I Said What I Was Where I Never Had Basically An Auto Loan But I Had Good Credit And In This Situation You Have A Pretty Good Chance Of Getting Approved By Yourself But Typically You'Re Still Gonna Have To Bring Proof Of Income When You Try To Get Approved For The Auto Loan Money Down Is Not Necessarily Going To Be A Hundred Percent But Typically They'Ll Still Want Some Form Of Money Down It Just Won'T Be As Much As Someone With Bad Credit And The Nice Thing Is You Can Actually Get A Pretty Good Interest Rate So My First Interest Rate Ever On An Auto Loan Was Three Point Four Nine Percent For Sixty Months Which I Mean For Someone Who Has Never Had An Auto Loan Before That'S A Really Good Interest Rate So If You Actually Are Smart And Build Up Your Credit History Even If You Don'T Have A Mortgage Or An Auto Loan To Build It You Can Solve A Chance Of Getting A Pretty Low Interest Rate If You'Re Smart About Things So That'S Kind Of Like That Part Of The Spectrum You'Re Still Going To Be Pretty Limited In Terms Of How Much Money You Can Get Loaned Out To You It'S Still Probably Going To Be In That Same First-Time Buyers Area Where They'Ll Probably Only Loan You Up To $15,000 So Just Kind Of Understand That And Yep Pretty Simple There Now The Next Step Is Someone Who Has Credit History Has Never Had An Auto Loan But They Have Like A Pretty Deep Credit History And This Is Typically Someone Who Has Multiple Credit Cards They Have A Mortgage Which Believe It Or Not There'S A Lot Of People Out There Actually That Have A But They'Ve Never Had An Auto Loan I Saw It Happen All The Time And This Is A Very Interesting First-Time Buyer Because They Are A First-Time Buyer But They'Re Not At The Same Time And So Sometimes Lenders Will Be A Little Bit More Lacks With These Situations Especially If You Have A Good Credit Score And They Will Allow You To Take Out A Bigger Loan Than They Normally Would For A First-Time Buyer I Had A Situation Where I Had A Customer Come In That'S I Mean Income Was Good Credit Was Good And They Had A Mortgage But They Never Had An Auto Loan And We Were Able To Get Them Approved For A $50,000 Vehicle Because Everything Matched Up Even Though They Had Never Had An Auto Loan Before And They Passed And This Was Just Because The Lender Looked At It From Okay This Person Has A Steady Job With Steady Income And They'Re Paying On This Mortgage They'Ve Never Missed A Payment They'Re Right They Look At All That Kind Of Stuff And They Go Okay This Person'S Chance Of Missing A Car Payment Is Gonna Be Very Low So We're Okay With Loaning Them Out More Money We Understand Why They'Re Trying To Take That Step In Their Life And I Guess That'Ll Lead Into The Next Part Of The Article Once You Talk About Things That Will Apply To Both People That Don'T Have Credit And People That Do Have Credit That Are First-Time Car Loan Buyers Now I Have Mentioned Some Of These In The Article But I Just Want To Reiterate A Few Of Them And Then Add Some New Pointers Now Like I Said Throughout The Article Typically They Will Expect Money Downed And That'S Just Across The Board Certain Situations You Might Not Have To But Understand That You Should Probably Budget That If You'Re Planning On Buying A Car You'Ve Never Had A Car Loan Before Just At Least Put That Aside And I Kind Of Mentioned That In My Other Article Anyways That It'S Good To Have Money Down Regardless And Then Obviously They'Re Gonna Expect Just More Stuff From You Typically Stuff Like Proof Of Income Proof Of Residency All That Kind Of Stuff Proof Of Employment Even All Just Everything You'Re Gonna Have To Do Quite A Bit More Leg Room Leg Room Leg Work Just To Get The Loan Done So Just Understand That It Might Be A Little Bit Difficult On That Side Of Things And It Might Take You A Little Bit Longer Now I Guess The Biggest Thing That I Would Say That Applies To All Of This Other Than The Stuff That I'Ve Already Mentioned With Like The Mileage Restriction The Year Restriction All That Is Coming To This With A Mentality That You Cannot Be Picky The Car Now I'm Not Saying That You Should Just Buy Any Car That You See Or You Should Buy The First Car That You See Here Buy A Piece Of Junk What I Am Saying Though Is You Need To Be Open-Minded And Not Look At This First Car Purchase As Like Your Only Car Purchase I Think That'S A Struggle With A Lot Of First-Time Buyers In Something I Personally Struggled With As Well And It'S Coming Into This And I'm Going Okay Well I'm Spending X Amount Of Dollars I Need To Get The Coolest Car Possible Whatever Because If I'm Gonna Spend This Money It Better Be Something That'S Worthwhile And When You'Re Someone Who Doesn'T Have Any Credit History At All Or You Have Very Thin Credit You Have To Build It Some Way And Having An Auto Loan Is One Of The Best Ways To Build Your Credit If You'Re Smart About It And So You Just Can'T Be Picky The Analogy That I Used To Always Use With Customers Is That This First Auto Loan Is Kind Of Like Dating Right You Have To Date A Few People Before You Marry Someone Some People Do End Up Marrying The First Person That They Date But Chances Are That'S Not Gonna Happen You'Re Gonna Have To Date A Few People Right You'Re Gonna Probably Have To Own A Few Cars Before You Find Your Dream Car Or Before You'Re Able To Afford Your Dream Car So You Need To Look At That From An Auto Loan Perspective As Well They Always Say What You Got To Crash A Few Clunkers Before You Drive That Ferrari You Have To Take Out A Few Auto Loans On Cars That You Might Not Love Before You Can Get An Auto Loan On A Car That You Truly Love For Me This Was Buying A $20,000 Car And Taking Out A Loan Of About 15 Grand For It Showing The Lender That I'm Really Good At Paying That I Pretty Much Paid That Off And So Then That Showed Lenders That I Was Committed To Paying On Loans So Then I Was Able To In The Next Year Buy One Of My Dream Cars Which Was A Shelby Gt350 And Actually Months Prior To That I Was Able To Lease A Truck Which I'D Always Wanted Truck And That Was A 20-18 Ram 1500 And So I Went From Being Someone That Had Just Basically A Credit Card As Credit History To One Auto Loan And That One Auto Loan Because I Paid On It Very Well And Because It Showed Lenders I Was Committed To And Came With A Lot Of Money Down I Then Was Able To Get Vehicles That I Really Loved So I Had A Vehicle That I Liked But I Didn'T Love Which Then Led Me Into Getting Vehicles That I Really Love And Obviously That'S Now Led Me To Where I Am Now Where I Can Get A Loan On A 2019 Ram Rebel Which I Thought Was A Coolest Truck Ever And Now This 2020 Ford Raptor And My Situation Is A Little Bit Different Now Where I Don'T Get Auto Loans Because I Need The Money From The Lender I Get It So That I Can Invest My Money But Again That'S A Article For A Whole Nother Topic But Just Kind Of I Hope That My Progression With Cars Can Show You Guys That You Need To Just Be Open-Minded To Vehicles And Just Understand That That'S Not Your End-All Be-All Car And You Just Need To Be Open To Options And Maybe You'Re Gonna Have To Drive A Car That You Don'T Really Love For A Year Or Two And Then You Can Get A Car That You Really Love That Is Going To Sum Up Things For My Article On First-Time Buyers And People That Don'T Have Any Credit If You Guys Have Anyquestions Obviously Leave That In The Comment Section Below And Other Than That If You'Re Stopping For The First Time Please Subscribe I Will See All Of You In That Next Article
Thank you for reading.
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