First car purchase: What you need to know

Buying your first car is an exciting endeavor. But for the first-time buyer, it can be a daunting experience, requiring decisions you may never have had to make before. And it's not just about choosing a car. You'll need to set a budget, find the right car, and most importantly, explore your financing options .

All of this might lead you into unfamiliar territory. In fact, financing a car is one of the biggest challenges for first-time buyers.

programs for the first car purchase

There are several programs that allow you to take out a loan. A first-time buyer program is one such option. These are offered by certain car manufacturers to make their vehicles more accessible to new buyers. These programs may include a first-time buyer loan or a special incentive such as a rebate.

Many of these may be available for both new and used cars. And there may be special programs for students and people with little or no credit history.

However, keep in mind that each of these programs may have specific requirements for you to qualify. For example, they may require proof of steady employment, usually for at least one year. The cap on the maximum loan amount may also be lower than traditional auto loans. And while some programs may not require a down payment, others may expect a minimum upfront payment.

College student programs might be available to recent college graduates as well as those who are still enrolled. These programs may also have certain criteria to qualify for funding. For example, these types of programs may require transcripts or a letter from the registrar of the university or college.

When you're shopping for a car , it may be a good idea to talk to the dealer about special programs for first-time buyers and see if you qualify.

Financing for first-time car buyers: loans and credits

Lenders may have different requirements when it comes to loan approval. Some lenders may also have partnerships with certain dealers and offer special incentive programs when you buy from them. Such programs could make the first car purchase a little easier.

You can also get pre-qualified . This will help you get an overview of your creditworthiness and set realistic budget expectations before you start your search.

Also, make sure you understand any additional fees that may apply to your auto loan. Each lender may charge different fees, such as origination fees. All of these could increase your loan costs. The annual percentage rate , more commonly known as APR, reflects the total cost of the loan as a yearly rate, including certain fees. Paying attention to this will help you get a more comprehensive view of what you're signing and compare loans from different lenders more effectively.

And remember: To ensure you get the best deal for you, shopping around for financing options is often just as important as shopping around for cars.

Improve your chances of getting a car loan as a new buyer

Getting a loan when you have limited or poor credit history can be a real challenge for any new car buyer. Here are some steps to help you improve your chances of getting a first car loan.

• Consider a co-signer or co-borrower. Check with your lender to see if a co-signer or co-borrower is acceptable. A co-signer or co-borrower with a good credit history can improve your chances of getting approved for a loan.
• Start saving. Saving for a down payment can help you get better loan terms and lower the overall cost of borrowing money. Start by setting a budget. You should consider the initial cost of the vehicle and additional expenses like insurance and maintenance. As you determine your ability to repay, also consider your regular financial obligations like living expenses and other bills. Then create a savings plan. Chase Autosave lets you automate monthly transfers from your Chase checking account to your savings account to facilitate a savings process that could help you reach your financial goals.
• Build your credit history. Lenders may review your credit history to assess the likelihood that you will repay a loan. Taking the time to build your credit score by paying your current obligations on time and minimizing your credit inquiries can impact your ability to get auto financing. By setting up an account with Chase Credit Journey® ^, you can easily establish your credit score and track and protect your credit score completely free of charge.

Before you buy a vehicle from a dealer , ask about any additional fees and negotiate the price. If you're buying a used car, check the vehicle history report whether you're buying from a private seller or a dealer. And no matter what type of auto loan you take out, make sure you meet your repayment obligations.

source : First-Time Car Buying: What You Need to Know | Chase