You will always remember your first car. It is lot like love. Actually it is love.
If you have just passed your driving test, remember that buying a car allows you great freedom. However, you should not forget the tremendous responsibility that comes with it. If you are about to buy your first car in Illinois, follow the three golden auto loan rules designed for first time car buyers. The rules are the perfect recipe for a successful auto loan.
1. The Need of a Car
We buy things that we do not need to impress people we do not like.
Buying a car involves making regular monthly payments to the lender. If you buy a car without any real need, you are assuming the responsibility of unnecessary financial burden.
Make sure that you need a car. If you have just received your driving license from Illinois Secretary of State, it is ideal to drive a used car. Once you have gained experienced as a responsible IL driver, you can opt for an expensive car model.
The only mistake that you can make is not asking for help.
It is often seen that young car buyers do not have adequate credit history. If you want an auto loan with zero credit score in Illinois, a lender will ask you to get help from someone. He/she requires a co-signer because a co-signer with good credit score ensures regular monthly payments.
Alternatively, you can ask either of your parents to become a co-applicant for your first auto loan. It will help you in getting quick approval.
If you are still searching for a job, ask your parents to help you with a couple of initial payments. Lenders are interested in regular payments. So, they will have no problem with it.
3. Financial Situation
You must ascertain your financial situation before applying for an auto loan in Illinois. Your financial situation is not ascertained only by your income. There are several other factors that you should consider before saying yes to your first car loan. Find out about the following things and understand whether you can afford an auto loan:
- Credit Score
Most young car buyers have zero credit score. But, it doesn’t give you the freedom from checking your credit score. Remember that something as simple as a department store credit card can add a few points to your score. So, it is always better to check it and make sure to remove errors, if any.
- Down Payment
Down payment of at least 10 percent of the total cost of the car is required by Illinois lenders. It is also ideal for avoiding an upside down situation. If you do not have cash for down payment, you can trade-in your old family car.
- Monthly Payments
Do not sign the contract if you are not sure about making regular payments. A lender may approve a low rate Illinois auto loan for your first car. But, if you are unable to make regular payments, you will end up facing repossession.
- Fuel and Maintenance Expenses
If you are recently out of school, it is important to keep your expenses in check. Calculate the monthly fuel charges as well as maintenance expenses of a car before buying it. You can create a monthly budget and choose a car only when it suits your requirements.
Follow the three golden auto loan rules while buying your first car. It will keep you away from making terrible financial decisions.
All the best!
Hope your first car buying experience is fun and stress-free.