You have been waiting for this day for a very long time: it’s time to buy a car. But where do you start? This is unfamiliar territory; you have never bought something so big before. Certainly, the big question is on your mind: “How am I going to pay for this?”
Trying to buy a car as a teenager can be difficult, but it’s not impossible. Be prepared though, because the lack of credit history will be your largest barrier. A credit history is important because that’s how lenders know you pay your bills.
Unfortunately, if you don't have a credit history, it may be best you allow an extra six months before you buy a car. The logic behind this is that it allows you time to build up your credit. You can do this by getting a credit card and using it for small purchases then paying it off each month. The time you spend building your credit will also allow you to save more money for your car. If you won't be able to save up enough money to pay for a car in full, attempt to save at least 20% of what you expect to spend - be realistic!
If you're against waiting six months, or simply can't do it because you're involved in after-school activities or live relatively far from school and work, then maybe ask if your parents will co-sign on a vehicle for you. Having a co-signer is a great second option if you're looking to build credit. Just be aware that if you do not pay your bills, your co-signer will be held responsible. Don't make your co-signer regret their decision to help you out.
Lastly, never co-sign a loan with a friend or boyfriend/girlfriend, as these situations almost always go wrong. Yes, it is risky to have a co-signer, but it's not a big deal as long as you pay your bills on time. After you have established credit, you will be able to get your next car loan on your own.
We know it's overwhelming at first, but use the tips provided and you will be just fine. Good luck!
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Categories: Buying a Car, Saving, Students