While the usage of public transportation and rideshare options such as Uber are on the rise with recent statistic showing that there are 160,000 Uber drivers in the US alone, studies reveal that 91% of American households still own at least one car.
The need to a own a vehicle remains a necessary part of everyday life, mostly for transportation to and from work. Owning a vehicle, more often than not, means financing it through an auto loan.
For the younger demographic, namely millennials, it can be a burdensome challenge to find top auto loans for first time buyers. With student debt averaging above $37,000, saving every penny has become one of the most useful skills a person can have. Online tools are proving the best way to plan ahead, and secure lower interest rates and avoid hefty fees.
Counting on Credit
It is no secret that a person's credit score heavily affects the prospects of borrowing money. This is not something that is taught in America's school systems, and most first time car buyers might be unsure of how to check their credit. Thanks to Credit Karma anyone can now view their score online for free, giving them a good idea of the types of rates that will be available upon speaking with a lender.
A common problem the younger demographic may run into is a lack of credit, which can be just as negative as having a bad score. While credit unions often work with those in this situation, it is highly advisable to build credit by paying bills through a bank account, or taking out small loans for other items than can be easily paid back. A few months of paying bills on time can drastically improve a credit score, opening up a wide range of better interest rates and payments.
A Better Lender
In our modern time, nearly every service available is set up to be quick and simple. While it may be less tedious to simply accept the loan that the dealership offers along with your purchase, first time and experienced buyers alike will find that choosing a separate lender will yield lower interest rates, less fees, and better financing options. The average markup at the dealership is 2.5%, which turns out to be more money paid than most might even think about.
Hinting back to the credit union option, those with little or no credit will find that becoming a member to one of these unions can save them thousands of dollars in the long run. With lower rates, a better chance of being pre-approved, and a more personal experience, this is the ideal choice for finding the best auto loans for first time buyers. In most cases, their rates will be even less than the buyer's bank can offer.
First time buyers should know a few things before speaking with any lender. The length of the loan's term, for instance, can easily increase or decrease the amount of interest paid. While the obvious option may seem to be simply taking the lesser payment, that choice often comes with a longer term and thousands of dollars paid in interest.
Another important option is choosing a fixed or variable rate loan. While the variable option usually offers a lower initial payment, the amount of interest one will have to pay monthly can fluctuate drastically. Unless a buyer is going to pay off the vehicle quickly, securing a decent fixed monthly rate is highly recommended.
There are plenty of websites out there to help first time buyers compare lenders, and that offer advice on the terminology anyone should know when speaking with a lender. Taking advantage of these helpful tools can ensure that you avoid the pitfalls of a terrible loan situation.