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How to Finance Your First Car?

Financing First CarFinancing your first car can be difficult. The main reason is that first time buyers lack a credit history and, therefore, a credit score. Despite that, you can find the auto financing you need.

Build Your Credit Score

Since revolving credit is the easiest to obtain, your first option to build your credit score is to get a credit card. There are several ways to go about it. First, you can apply to a company that has a reputation for offering cards to people with no credit and bad credit. Capital One is probably the best known lender in this category.

Should you be denied an unsecured card, you can still get a credit card. You will have to begin to look for the best secured credit card for your needs. These cards are different than pre-paid cards. Pre-paid cards are limited to how much you have direct deposited and are never reported to a credit agency. Secured credit cards will have a limit equal to the amount that you deposit into a savings account with the issuer. You can deposit more to increase your limit, but you cannot withdraw money until you have paid off any balance and close the credit card account. While you will not earn interest on your deposit, the credit account is reported to all of the major credit agencies, building your credit history.

After getting a credit card, you must limit the amount that you charge on it. Your balance must never exceed 30 percent of your credit limit or you will be penalized by the companies that create credit scores.


Building your credit with a credit card will take at least six months. This gives you time to build a payment history. If you can not wait that long before buying a car, your next best option is to find a cosigner. Lenders require that the cosigner be creditworthy and have enough flexibility in their income to pay the loan if you do not.

Last Option

If you cannot find a cosigner, then you have the option of searching online for a specialty lender. These lenders operate online only, to lower their overhead. This allows them to take on loans that seem too risky for other lenders. They specialize in bad credit auto loans and no credit auto loans. These loans may have a higher interest rate than you feel comfortable with and can have shorter loan terms than a bank or credit union, but the loans are reported to all of the major credit reporting agencies and will improve your credit score as long as you make all of your payments on time.

How We Can Help

We allow you to apply online, then be matched with a dealer or lender willing to finance your credit (or lack thereof). This saves you from spending ages hunting for the right company, and you’ll have the added benefit of being led through the process by an experience lending professional local to your area.