Question:
I just turned 18 last week. I have been driving a 1988 Ford Escort for a year and a half. I paid $500 for this car so I am not sure if it is even applicaple for a trade in. I think it is time to upgrade before i get stuck on the side of the road. I would like to purchase a 1999-2000 Jeep Cherokee. This vehicle cost about $7000. I would be able to put down $1500 for a down payment. The problem that i keep encountering is my work history. I have had the same job for 1 year and 8 months most lenders expect you to have a job for at least 2 years. I am not sure if i Can get a loan or not. I have tried credit unions a couple of weeks ago and they said i have to wait until i am 18, so now i am 18 and am applying again. Do you think my credit score would be a factor? I am not sure what it is because i am young. Any Comments would be greatly appreciated.
Answers:
You may not be able to without a cosigner becaue you don't have establised credit yet. The bigger problem is that you will most likely not be able to get a loan for 7k on a 8 year old car...if you do the interest rate woud be much higher than getting a newer car. The factor to take into account is that the longest loan term you could get for an 8 year old car is 2 or maybe 3 years...so you are looking at a payment of probably $200/month (for a 36 month loan at 9% apy...which is probably low considering no credit history) can you afford that?
You need to do more research and try to find a newer vehicle (I am not saying brand new because they depriciate 40% after you drive off the lot and you are then upside down in the loan).
PS $1000/month means you can only afford about $150/month for a car payment.
Probably not. You don't have an established credit history...7,000 dollars is a large amount for first loan. Is it likely that you can make the payments on such a loan?
Why don't you try for a less expensive car? Something for 3k or 4k should still get you a decent vehicle. Before you agree to buy it make sure you can have it inspected by the automechanic of your choice.
for a car loan, I'd guess your credit score would be a bigger factor than work history (but its only a guess).
by federal law, the credit reporting agencies have to provide one free credit report per year. you should check with them to see what your credit score is. 700+ should be okay to get you a loan on good terms (shop around), 750+ should get you a very good rate.
in my opinion, though, you shouldnt drop $7k on a car loan if youre 18. you'll be paying off that loan when you are ready to sell your car. save those payments for a few monts, and buy yourself something more reliable than your escort.
Try E-loan, they finance auto loans for people in your situation.
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