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First-time car buyer programs are designed to help car buyers without a credit history — and those with a thin credit history — get into their first vehicle. These programs typically have less stringent credit requirements than traditional auto loans, but approval is not guaranteed. If you’re interested in a first-time car buyer program, research vehicles in advance, create a budget and ask about any additional fees before applying.
How do first-time car buyer programs work?
Although first-time car buyer programs are easier to qualify for, approval is not guaranteed — it is still possible to be denied. So if you do not get approved, you may need to look into other options such as cosigners, secured credit cards and checking accounts.
What are the requirements for a first-time car buyer program?
First-time car buyer programs vary by lender and manufacturer, so requirements can change. However, there are some basic requirements that remain consistent across most programs. For example, you’ll almost always need to be at least the age of majority in your state to get a loan.
Specific requirements for qualification will vary. You will likely need to provide proof of employment and income and verify basic personal information, like your birthdate and Social Security number. Whether you’re expected to have a down payment will also vary by program.
The programs also may have limitations, such as only being applicable toward certain car models. Other requirements can include the need to provide personal references or proof of your recent or upcoming college graduation if the first-time car buyer program is geared toward college graduates.
Can I qualify as a first-time car buyer if I’m not a recent college graduate?
Not all first-time car buyer programs require a buyer to be in college or a recent graduate. If you’re interested in a first-time car buyer program, look at the manufacturer’s site or ask a dealer.
How do I apply for a first-time car buyer program?
First-time car buyer programs are available from car manufacturers and dealerships.
- Research vehicles in advance: Research what vehicle you’d like to purchase. First-time buyers can also benefit from learning the auto financing process to be as informed as possible.
- Create a budget: Create a budget that allows you to save toward a large down payment. It’s recommended you calculate and save 20 percent for a new car and 10 percent for used. This will help you get the best deal on a vehicle and the best interest rate.
- Ask about additional fees: It’s always a good idea to ask about any additional fees and negotiate the purchase price when you purchase a vehicle from a dealership.
- Ensure you meet credit requirements: Some first-time car buyer programs require buyers to meet credit requirements. Ensure that you have a strong enough credit history for the particular program and that you meet your repayment commitments.
- Consider all options: You may have a few other options when buying a vehicle, so consider everything before you apply for a first-time car buyer program.
Should I buy new or used?
When you’re looking to buy your first car, an important consideration is whether to buy new or used. Both have their benefits and drawbacks.
While a new car comes with minimal maintenance and a warranty it also comes with a steep price tag. On the other hand, used cars with a significantly lower cost on average but could have hidden issues or a lot of mileage already on them.
The bottom line
It is beneficial to speak to the dealership about special first-time car buyer programs. You should also prequalify with at least three lenders. When choosing a first-time car buyer program, you should consider the requirements of the program, such as the need for a co-signer or proof of college graduation. You should also be aware of the tips for buying your first car, such as being honest about your needs and knowing your credit score.