Buying your very first car can be an exciting time, but securing you first car loan can be a big decision. For many people, their initial car purchase will be the first form of credit that they will obtain and one that will commit them financially for some years. There are many things to consider when it comes to a first time auto loan and knowing what to expect can help dramatically when it comes to getting the best car finance.
If the car finance that you are seeking is the first form of credit that you are getting you will need to be aware of the fact that you probably will not have established a credit rating. This can be the biggest hurdle when it comes to a first time auto loan and one that will affect the type of finance that you can get and the rate that you can secure. Generally, people who are getting a first time auto loan without a credit rating will be charged a higher interest rate. This is because you will be considered a higher risk to lenders and so they look to cover themselves by charging you more for your finance.
If you are getting a first time auto loan without a credit score then it is important that you do not accept the first rate offered to you as there are many lenders who can provide you with a lower rate. To get the best price on a first time auto loan you should not only check out the rates offered by the larger lenders, but look at specialized providers who deal with no credit car finance. There are many companies who can offer you a first time auto loan at a good rate on the internet and this is probably the best place to begin your search.
Another option you have when getting a first time auto loan is to get someone to go guarantor on your loan. This could be a parent or your partner who has a good credit rating and in many cases lender will be able to offer you a much lower rate if you are able to provide a guarantor for your finance agreement.
A first time auto loan is an important step toward building up your credit rating and so you should always ensure that you consider your budget carefully before entering into a financial contract. There are a large number of websites that provide online loan calculators that can help you work out your loan repayments and realizing what you can realistically afford on a first time auto loan is important.
In many cases a first time auto loan will cost you slightly more in interest, but it is important that you ensure that you make your repayments on time as this can affect your future borrowing capacity. If you are not able to secure the best rate on your initial car finance but have managed to make prompt repayments you will always have the option to consider re-financing this loan in the future at a lower rate of interest.