Tips For Safely Negotiating a Car Loan as a First Time Buyer
Getting approved for a car loan when you’ve had no previous history of borrowing is almost as hard as borrowing with very bad credit. Lenders have no real record of your performance and so are skeptical—scared even, of lending money to you. But this doesn’t mean that all doors are closed. In fact, the opposite may be considered true, and if you stick around for the next few minutes I’ll show you why. After reading you’ll be totally clued up on car financing, especially as it relates to a first time buyer.
The first tip is involves the size of the loan you seek to borrow and the advice here is to start small. Sure, you may have your eye on a spanking new Honda Civic, but if that car costs too much, the risk may be too much for a potential lender. Pursuing a big purchase as a first time borrower and buyer will expose you to high incidence of loan rejection.
The second tip involves the source of the loan, or more specifically whether the lender is sourced online or offline. The first thing you should be aware of is that offline lenders are rich on experience but inadequate in terms of loan flexibility. This is because of the inherent cost involved with running a business offline—these make it very difficult for an offline car loan company to give the degree of allowance you can enjoy with an online company. Aside from the obvious benefits of being cheaper, online lenders have very fast approval times. In fact, it’s not uncommon to see applications being approved in just 24 hours. So, the advice in this regard is to go with an online company.
The third tip involves the loan terms. A loan borrowed with the forecast for payment in the short term is going to be expensive. Varied to the medium term or even the long term, and you have a situation that is more manageable. The only thing to be aware of here is that long term loan repayments will cost you more over the life of the loan. If however, you are keen to save some money over the long term, you can always come up with a sizeable down payment in order to offset the high short term monthly repayments—this is what many people do.
As a final tip, I would like to impress upon you the importance of lender credibility. As a first time car loan borrower and indeed a buyer, you’ll be vulnerable, and your biggest challenge will be the slick-talking salesmen out to get your money. You simply have to be insulated against this and the best way is through vetting of the potential lenders. The most efficient way to do this is use the leverage of a third-party vetting agency like the Better Business Bureau (BBB). The BBB will make sure that a lender is coming with its regulatory obligations, treating consumers fairly and generally holds good rapport with the general borrowing public.
Remember, online lenders are the best, and start slow when getting your first car and car loan. Your chances of success are infinitely stronger.
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