I just turned 18 and need to get an auto loan but obviously have no credit. What type of interest rate should I expect? I am looking to get an $11,500 used car and put $3,000 – $4,000 down. Looking at a 4 to 5 year term.
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You can expect them to tell you to get a cosigner.
If you were to find someone to lend you $$$ it would be close to 21%.
You will definitely need a cosigner with excellent credit. If you don’t have one then chances are you wont be approved for a loan. If you do get approved, you are looking at an interest rate between 20-25%.
Good luck!
If you have a lot of money in your checking and savings account, you’ve been working in the same job for over 2 years, you are paying all your bills like electric bills, cell phone bills, water bills, etc etc. on time, you will not need any co-signee. You will be approved right away if you apply for a credit.
Buying a car is a loan, so therefore, ask if they can approve you without credit history. Bring in your pay stub, bank statements with a lot of money in it, receipts for your monthly payment of bills. Being approve in credit cards is very easy when you apply for a credit card from a store like macys or jcpenny or target. But I think your bill receipts will do.
Before you go get that loan, make sure you understand how much you will really pay for that car.
Let’s say you put down $3,500 and finance $8,000 @ 19% interest beginning July 1st, 2009. It will take 53 months [4 years + 5 months] making monthly payments of $250 to pay off the loan.
You will have paid the $3,500 down payment + $8,000 principal +$3,855.70 in interest for a total of $15,355.70.
Estimate , if that’s possible , what the car will be worth when you make that last payment in December, 2013.
Decide whether or not you are likely to be satisfied with the deal at the end as well as the beginning and go from there.
The lack of credit shouldn’t be that much of a problem if you have a job and a 30% down payment. Shop around. Some lenders will put a lot of weight on credit history and some won’t. If you have a problem, go someplace else. The dealer can probably find you a decent but not fantastic deal if he really wants to sell the car. There aren’t a lot of people walking around with 4000 down payments in their pocket.