Spending

First Time Car Buying Tips For Teens

 

Financing A Car

If you can buy the car with cash, great!  If, as a teen, you need to finance your car you will need a co-signor with a person who has a credit history and an employment and salary history, i.e. an adult.  Get your/co-signatory’s credit report before you shop for financing see Credit History & Credit Score (FICO).  You will need a score of above 680 for the most favorable terms.  Also get pre-approved for a car loan say from a bank or other lenders.  Do not rely solely on the auto company for financing.  Shop around to get the best rate you can.  Remember, most of the time it is the automobile manufacturer’s financing division that makes the real money.  If you do need to borrow:

  • Make sure you understand all the terms of the loan.

  • Make sure you can pay it back and are comfortable with the monthly payments.

  • Put as much money down as you can (you’ll get a lower interest rate, and have to pay off less).

  • Get the shortest time period you can manage.  Remember, no more than 48 months!

  • If you get a rebate, use it as part of your down payment.

  • If you make extra money, use it towards your loan—pay it off early if you can.