Buying a car with no credit advice


#1

Hi, so im only 19 and in need of a car. i want to buy a used car around 6 or 7 thousand. i do not have credit or anyone to cosign… i was wondering if i would have any chance of buying a car of that price if i put a down payment of $3000. advise is needed for a first car buyer.


#2

What’s your income?

Do you need a car or want a car?

Could you get by with a piece of crap that costs $1000?

If the car isn’t fully paid for your insurance is going to be a bit expensive, in case a tree runs into you.

Where do you live? Can you get by with a scooter?


#3

7 grand is a crazy budget unless you’re making some serious money. You can get a pretty decent car for between 3 and 5. Hell I got my MR2 for 5 grand.


#4

My vote is also for crazy as you can find a very nice car for 3 grand or less. The key is footwork, homework, and most of all, patience.

While I’m not recommending a car like this for you, I bought this '96 Mark a little over a year and a half ago as I’m a huge fan of these cars. It’s as slick as it looks in and out, runs like a Swiss watch, and has been rock solid reliable just as the wrecked one that preceded it was. (Pic taken a couple of days after I bought it.)

It took me 2 months of looking, a 600 mile round trip to get it, but 1800 dollars later it was mine and it was absolutely flawless on the 300 mile drive home.

A bit over a year ago my son bought a very nice '95 Camry to use as an everday driver and he gave 500 dollars for that car. Other than putting a new set of tires on it the car has been outstanding ever since.

Flashing 3 grand in front of a car salesman will have them on you like a vulture on a carcass. The big question is what will they talk you into leaving the lot in.


#5

Just got a fresh box of advice in today. I hope you mean that you have no “credit history”. If you have had your job for six months and have no missed payments on any debt, you may qualify for a loan. The finance guy at the dealer will tell you the details.

The $3,000 down payment may be a big help. It means that the car will be worth repossessing if you stop paying on it.

Your insurance is going to be sky high as you will be required to have collision and theft added to the policy. Even if the whole deal is approved, it isn’t really a good one. If you own the car without a loan, you can just get liability as far as I know.


#6

Do you belong to a credit union? If so, I would start there. They might be able to finance your purchase, or at least give you some good advice.

Stay away from “buy here pay here” used car lots. They will take advantage of you.

With $3,000 in hand, I think you should look for a decent car worth about $2,500. That will leave you with an extra $500 for things like insurance and repairs. Even if you end up with a clunker with no air conditioning, it should last long enough for you to save your money for a replacement in two or three years.

Go to a place like Goodyear or Firestone and apply for a store credit card (or apply online). They will be high interest cards, but if you pay them off fairly quickly, this will help you establish credit, and they will be available if you need to have any emergency repairs done. This credit card will also come in handy when maintenance is due and you don’t have cash available at the time.


#7

Don’t forget insurance. If it is possible to get on your parents insurance policy, it will save you a lot of money. You will also have to register the car in your parents name to take advantage of this savings method. Your pride might get in the way until you see the savings each year for insurance.

As long as you have a job, you will find a loan. The problem for you is how much interest you will have to pay. Check credit unions and banks in your area too see how much you qualify for. Then go shopping. Dealers will almost certainly try to sell you a loan. If you know the loan particulars from a bank, you will know whether the car dealer loan is a good deal or not.


#8

The Best Advice You’ll Ever Need: Don’t Spend More Money Than You Have. Many Folks All Across The Country Are Now Learning This Lesson The Hard Way.

As a young punk, only 19 years-old, you have a chance at doing life the right way. Pay cash for a $3,000 car or save up more money and buy a more expensive car. Don’t finance a car unless you need to in order to establish a credit history. Then, don’t finance more dollars than you have in your car account to pay off the loan.

While you’re driving your PAID FOR CAR continue working, earning, and keep saving until you have enough to make another step up to a nicer, newer car. If you don’t know how to already, a cheap car will help you to learn car maintenance and repairs, a real bonus that will serve you well. I always felt better driving a paid off vehicle, regardless of age or condition than I every could if I was making payments.

It escapes we why people buy and pay for cars bassackwards. They buy (take) the car and then pay for it, rather than pay for it and then take it. I guess it’s a sales gimmick more than anything else. I also don’t understand people who wait until they’re 18 to realize they’re going to college and haven’t saved the money for it. I saved, worked, and paid for college as I went.

You knew for some time that you would need a car and I commend you on your $3,000 savings.

I have never made payments on a car and wouldn’t to this day. I started buying fairly cheap cars as a young punk (taught myself how to work on them) and now pay cash for even brand new ones, although paying cash has made me a wiser shopper. I usually buy slightly used cars because there’s something about writing checks in multiples of $10,000 that makes one aware of just how expensive and unneccesary they are. There are better uses for that money.

The next car you buy after this one can cost $6,000 to $7,000. This one should be $3,000. Don’t start out on the wrong foot. Pay as you go.

You can thank me later.

CSA


#9

If the OP’s car costs $3,000, where is he/she going to get the money for tax, title, and registration? Surely buying a $3,000 car would necessitate taking out at least a small loan.


#10

A way to establish credit history, if that’s even something you want to do, is to save all the money to buy the car BUT get a loan anyway.

A bank or credit union may work with you on this.
You open an account with all the money in it needed for the loan, you don’t use that account for anything else. THAT’s the collateral for the loan.
Then they give you the loan, backed by the pre-established collateral savings.
You make the payments on the loan, on time, with the money from the savings.
– credit history established. –

I did this, but with a co-signer to get the loan. The savings guaranteed to the co-signer that the money could be had even in default.


#11

If tax/title/registration on a $3,000 car is more than $300, you’re doing it wrong. By the time he finds a car, he should have the $300 from his job.


#12

I thought “im … in need of a car” was pretty clear.


#13

As is so often the case on these boards, responses are highly biased, not factoring that other people have different situations than you.
Depends on where you live. In MA for example, there is no way you are going to get a $3000 car on the road for $300.
Tax=$187.50, Title =$75, Reg=$50, Inspection=$29, plus it probably needs something here and there to pass. Some other states cost even more.
If he needs the car to get to a job, he might not start getting paid until at least two weeks after getting the car.


#14

I’m with Whitey. Take two thousand of that and open an account at a credit union and discuss the loan with them. Rates are very reasonable there and it will help build your credit history. At your age, you should have already established a checking and savings account and gotten a credit card or two. If not you need to start now. Under no circumstances should you finance through a used car dealer.


#15

Don’t they have those teenager credit cards that are reloadable like a gift card, but works like a credit card? Would those help build up credit scores?

You might luck out on financing through a dealership IF you put the majority of the price down on the car. Say they’re asking $5000 for the car, if you put $2000, they might work with you. This worked for me at a car lot where I put a bunch of cash down and they financed me, but with a higher interest rate, with no cosigner and pretty much no credit history at age 20. As long as you’ve got a job and can afford the payments, go for it. Do NOT go to a Buy here pay here type place, they’ll see you coming and it won’t be pretty(think 25% interest rate).


#16

If you have a job and a Credit union you may be able to get a personal loan rather than a used car loan. There are a gagillion places that will give you a loan, but look at the total payoff. The mumbo jumbo can get really confusing.


#17

If you really want to finance a car, and have a decent amount of money, take the money you have to your local credit union, and then open along term cd, for as long as you want the car payments to be.

Put all the money in the cd, and then open a loan for the car using the cd as collateral.
The CD loans are typically only 2 percent above the CD’s interest rate.

This way you can have a credit history building car loan, at a great loan rate, even though you have no credit history to entitle you to a decent loan yet.

BC.


#18

If you want a nicer car than the $3k you have will buy, that is understandable, but I would not finance more than another $3k. My sister did something like this a few years ago and it worked out well for her, although for whatever reason the loan officer at the bank acted like they were taking a huge risk offering her a secured loan of $3k on a car worth nearly $7. She put down $3700 and financed the rest, and owned the car in less than two years. If you are going to finance a car, I suggest doing it this way. I also suggest having a repair fund right off the bat. It’s not unusual to have to spend a grand or so on a used car right off the bat to make it mechanically sound and up to date on maintenance.

Others already suggested this, but it bears repeating: STAY AWAY FROM BUY HERE PAY HERE PLACES!!! Not to name any names, but JDByrider is the worst of the worst as far as these places go. If you go there, you will pay three times what the car is worth, plus 27% interest on the aforementioned grossly inflated price, with all interest built into the loan to eliminate any early payoff benefits. I used to work with a guy who bought a 1998 S-10 there. He said by the time he has the truck paid off, he will have paid nearly $19k for this 13 year old high mileage pickup truck. Cash to a private party is really the way to go for buying a used car.


#19

Just a quick note - many banks have a minimum loan amount, usually around $5,000. Not sure about credit unions.