What do I need to know before financing my first car?

Posted Thursday, Apr 13, 2017

How old do I need to be to buy a car?

You must be at least 18 years old in order to purchase a vehicle.

What do I need to have before going into a dealer or a bank?

You should have some basic information with your prior to applying for financing at a dealer or a bank.  Always have your driver’s license, or course, as well as an insurance card, if you already have insurance.  (If you don’t, be prepared to buy a policy before you drive away in your new car) We also recommend having your most recent paycheck stub, as well as some form of proof of residence, like a phone bill, utility bill, etc.  Also be prepared to offer up to 5 personal references with address and phone number.

Do I need to have a good credit score to finance a car?

While having established credit will allow you to take advantage of lower interest rates and down payment requirements, certain lenders are now financing those with no credit history at all.  If you’re unsure about your credit history, you can get a free report from annualcreditreport.com, or contact us at Petrol Auto Sales, where we will be happy to offer you a free auto finance consultation, with no credit check required. We offer this as a service to anyone who inquires, and will gladly make recommendations for you regarding your best course of action in buying your first car.

What kind of interest rate should I expect to pay?

Interest rates on a car loan will vary depending on a number of factors.  These include your credit history, whether or not you’re buying with the help of a cosigner, year and make of the car, mileage, length of the loan, down payment, and of course which lender you are borrowing from.  Generally credit unions will offer some of the lowest rates, with a typical first time buyer program ranging between 6.99% and 18.99%.  Borrowers with unproveable income sources, short time on the job, or negative credit history can expect to pay higher.

I’ve seen interest rates advertised like 0%, 1.99%, or 2.99%, can I qualify for those?

While rates can change with the economy, in 2017 most interest rates below around 3% are due to a promotion through a particular auto manufacturer.  Often times to boost sales on a slow selling model, car makers will offer special interest rates like 0% to try and drum up sales.  Generally these rates are reserved for super qualified buyers, and can sometimes only be available in liu of cash discounts or rebates.  If you’re talking to a dealer offering a special interest rate, we recommend asking them if you could buy the car at a lower price if you financed at a standard rate.  Sometimes the savings in the rate do not make up for paying a higher selling price.  For more information, or if you’d like to discuss having someone broker a deal on your behalf, Petrol Auto Sales offers a nationwide Auto Broker program.  We will contact dealers on your behalf, negotiate a great price up front, and present all your options to you.  All you have to do is walk in, sign your name, and drive away.  Click here for a free auto broker consultation.

How much down payment do I need?

Every situation is a little different.  Some first time buyer programs allow no money down at all.  To be safe though, we recommend saving at least 10% of the selling price to offer as a down payment.  Remember on top of the selling price you’ll be responsible to pay sales tax (in most states) as well as various DMV registration and transfer fees.  These fees can be 10% or more of the selling price of the car, so having 10% down means you aren’t financing and paying interest on you sales tax.

I found a car a like, but the dealer selling it told me I had to purchase something else, why can’t I buy the car I want?

Often times lenders have specific requirements when it comes to year and miles on a car for a first time buyer, but sometimes dealers will try and take advantage of your situation by trying to sell you a car you don’t want, simply because they’ll make more money. A car is a large and long term investment.  If you’d like a second opinion on something a dealership is telling you, reach out to us at Petrol Auto Sales and we’ll be happy to consult free of charge.