How to Get a Car Loan

I remember when I got my first car loan. I purchased a 1999 Honda Accord EX V-6 2 Door Coupe. It was a SHARP car. She had leather seats, a sun roof, and a customized sound system (she was a used car). She also had about 75,000 miles on her and cost a whopping $14,000. This was back in about 2003.
I NEEDED a car. I was fortunate enough to have my grandparents gift me my first set of wheels: a 1995 Chevrolet Lumina. She was a good car, but the transmission was going out and I couldn’t finance a repair so I needed to trade it in. I got about $4,000 for the car, which brought my first time car loan amount down to $10,000.

Did I mention that I was only making about $8 an hour? Yeah. I was a college student and I was scrimping by. Looking back, I should have chosen something a little bit more reasonable, but I got this car. She served me well, and I traded her off for my Honda Civic Hybrid in 2005.

How did I get my first time car loan? Well, I kind of cheated. You see…I worked at a bank as a teller. This meant I got premium interest rates and they matched my loan payments with my pay cycle so they automatically deducted the loan from my pay. This way, they knew they were getting paid, which brought the risk to the lender down. Not everyone has this luxury. First time car borrowers could be viewed by the lender as risky, especially if they have little or no credit. I have three simple tips to help you get through your first time car loan process smoothly so that you can drive off in to the sunset in the car of your dreams.

How to Get a Car Loan Tip #1: Know Your Score

Before applying for your first time car loan, you need to know your credit score. If your credit is 620 or lower, you can expect to be denied and you will have to seek financing through high-risk lenders. You will pay much higher rates than others with higher credit scores.

Not sure where to get your credit score? I only recommend the MyFICO website, because FICO is the creator of the credit score. The “free credit report” sites are usually scams which will make you sign up for a monthly service which costs about $15 per month (which you can cancel – but good luck with that!). You will pay about $12-$15 to see your credit score, but it’s worth it if you are getting your first car loan.

How to Get a Car Loan Tip #2: Be Organized

The key to filling out any loan application is to be neat and organized. Applying for your first time car loan is no exception! When you look at the application, it’s great to be able to document any claim you put down. If you have to document your social security number, make a copy of the card for the lender along with a copy of your driver’s license. Of course, they will need to physically see the originals, but making a copy for them and having it indexed with your application will be impressive.

Make sure you can document any income you claim. When you are a first time car borrower, you can expect to have all claims substantiated. Be prepared to show recent pay stubs or W-2 forms. Don’t lie about any debt you may have – your credit report will let the lender know of any monthly payments you have that are reported to the credit bureaus.

How to Get a Car Loan Tip #3: Be Reasonable

If you are making $8 an hour, you shouldn’t have a $10,000 car note. I am speaking from experience on this one. It’s incredibly hard to get by. Be reasonable in that you seek to finance that which is affordable to you. It is so important to think your first time car loan through. Getting a car loan involves more than just selecting a vehicle and signing a paper. You need to really look at your finances and decide what you can afford.

If you know your credit score, are organized, and reasonable getting your first car loan shouldn’t be too difficult. Knowing your credit score will help you negotiate better rates, and being organized will show the lender you mean business. Being reasonable ensures that you aren’t financially strapped due to your purchase.

Good luck, and I hope you get your new car loan soon!

How to Choose a Credit Card

Choosing the right credit card can vary on who will be using it. While one card might be right for one person, it could be a bad idea for another. Many factors can affect what type of credit card will be the perfect fit. While some might offer a great reward program, it’s APR might be a little too high.

Interest and fees. While credit cards are wonderful to have, they also have their downside. The downside comes in the form of interest. Whatever a cardholder has spent must be paid for. If it is not paid for soon enough they will have to pay penalties and fees. That is why the lower the credit card’s APR (Annual Percentage Rate) the better. Some credit cards have various fees on top of the normal amount of interest that has been applied to purchases. To avoid finding out after the fact, it is critical that the fine print has been read before using the card.

Looking for rewards. Credit card reward programs must also be considered when choosing a credit card. This can be anything from airline miles to an autographed basketball. Each credit card company will offer some similar rewards but also will have some different choices. Before someone decides to become a cardholder with a certain company, they must make sure that it will be worth their while. Some credit cards might give more points depending on where the cardholder uses it. So while the incentives are the same, the amount of points that can be received will vary. To get points quicker the cardholder should seek a credit card that offers more points at the typical locations that they use it. Many credit card companies offer multiple credit cards to choose from.

Sign-on bonus. On top of credit card rewards, many credit card companies will offer sign-on bonuses. These bonuses will change periodically. It is not unheard of for a first time cardholder to receive If a $100 just by making their first purchase. Credit card companies do this so the they can make sure that the credit card will be used. If the cardholder starts using it frequently, and falls behind on payments, the credit card company has a chance to make a good amount of profit from the interest. The higher the interest rate on the card, the more money they will receive. So while sign-on bonuses can be tempting, they can also be fatal to the pocketbook.