Financing a car can be a tough process if you don’t have the right information at hand. This article will discuss the basics of financing a car including how, where, and how old you have to be.
Now, what does it mean to finance a car? Financing a car or car finance is a term used to refer to the financial steps, products, and avenues a person may use to acquire a car. These avenues include loans, leases, or even monthly payments. We’ll discuss these avenues and outline their advantages and disadvantages. Firstly, to answer the question of how old do you have to be to finance a car. You have to be at least 18. For more information on car shopping for teens click here.
What You Need to Finance A Car
- Credit Score – You need a good credit score before a bank will agree to give you a loan. The problem with this is that you cannot get a credit card before the age of 18. You may not have enough time to build your credit to an acceptable score if you’re also trying to buy a car the minute you turn 18. If you’re in this situation you might want to consider lenders.
- Lenders – If you have a low credit score you will find a lender willing to work with your score. The problem is you will have a higher interest rate on your loan. If you have a family member with an excellent credit score you may opt for the next option.
- Co-signing a loan – If you apply for a bank loan with a family member who has a good credit score then your application may be accepted. The higher their credit score the lower the interest rate will be because the bank will consider this when processing the application.
- Special Finance Plans – If you’re a student then there’s a chance that you will get some discounts, auto-loans, or special consideration amongst certain lenders or car dealerships. Of course, this is heavily reliant on your GPA, educational record, and your income, if you have one.
- Local Credit Union – Local credit unions are great for people with low credit scores looking for a loan.
Which Financing Option is Best for you?
- Car Lease – This is when the car is leased to a person. The person doesn’t own the car and if there has been no prior agreement, the lease payments are not payments to purchase the car. When the lease is up the car will go back to its owner. This is a great short term plan. If you’re planning on moving to another state or country and do not need a car in the long term then this is a great option.
- Car Loan – We’ve briefly discussed car loans and where to go them however, we have not discussed the necessity of shopping around. Never accept the first loan you’re offered. Look around at other lenders, unions, and options so you can pick the best loan for you.
- Installment Payments – Another way to finance a car is to pay in installments. This might not be possible for everyone because you’ll need to offer a substantial down payment and a credit score that proves you can afford the installments.