I'm turning 18 soon. What should I do?

Question

I'm turning 18 on October 10th. And I want to finance a car instead of saving up for a used ragedy car like my peers.

So I talked to my finance teacher and asked how much interest they would give me since I just turned 18 and have no credit. He said when he was 21 they gave him 22% interest, so what he did was got out a loan from his credit union for 7% to pay off the car loan and then just paid monthly for the credit union loan since it was cheaper.

Should I do this?? Finance a car then take out another loan with less interest to pay off that loan? Or what would you suggest? What did you do when you financed your first car?

By the way, I have two jobs. And plan on using the second job to strictly pay off my car note, so how I will pay really isnt the issue, its how can i pay the least.

Answer 1

interest rate is based on ability to pay as well as payment history!
Being you are not yet 18 you will not have a payment history.
You can either save up and do a cash secured loan, Save up for a large down payment so you have enough vested interest to make them feel secure in the loan
Or get the higher interest loan and make payments on it for a few months to gain some credit history!

Answer 2

Congrats on the B-Day coming, coincidence it is my B-day too, but I will be 42. The best way to start getting the loan you need is to ask your parents or relatives to co-sign the loan with you. What this does is show the bank that someone else is willing to back up your decision financially if needed, but that they have faith you will make all of your payments when due.
You should try to find a car that is less than 10 years old, and has less than 100k miles on it, as that is the banks minimum requirement. The price should be just over $5,000.00 as that to is a minimum. Try to have atleast 10% as a down payment, along with cash on hand for taxes and title. This will give you a 5 year loan with payments aroound $150.00 a month plus gas and insurance. One think you cn try to get the bank to do is accept bi-weekly payments rather than monthly payments. This will allow you to pay more on the principle and less on interest, as well as pay it off sooner. Credit unions are great for this type of arrangement.
Another point to keep in mind is the insurance the bank offers on the loan that covers you if you should lose your job or get injured and can't make a payment. It also has a death benefit should your co-signer die the loan is paid in full. Sounnds harsh but well worth the pennies a month that it adds to the loan payments.
Hope this helps.

Answer 3

I would recommend signing a contract on a cell phone immediately. It doesn't sound like much, but it will at least establish your credit. Obviously, you can't simply establish your credit and the next day go purchase a car but it will start your credit off and over time will help.

I say this because I purchased my first vehicle from Ford and got the promotional 0.9% interest rate as a result of my good credit. When I asked about my credit rating the dealership told me that the cell phone helped considerably.

As far as the down payment, it is true that the more you put down, the less of a risk you are to the lenders. Also, if you need additional support and they are willing, allow your parents to co-sign. It is an excellent way to help you with credit, which will ease the burden off both you and them later in life.

Answer 4

Hmmmm.... lets see how to answer this....

Lets say your friend buys a ragedy car for $5000. Its an old '93 Taurus with 100K miles on it.

You go out and buy that new Honda Civic LX for $17K because the dealer's got some cool incentives and as a 2006, he's trying to clear the lot and so he give's it to you with a 6% loan.

Over the course of the next 3 years, your friend's raggedy car keeps having problems, alternator went out, needed a fuel filter, needed breaks, the dude ends up putting $2000.00 into the piece of junk. Meanwhile you have been living in the lap of luxury, getting good gas mileage and not having to worry a bit about the maintenance of you nice little Honda.

So after 3 years, you guys decide its time to go get different cars... you sell them on Car-bay (the great new car selling system for that time that gives you exactly what your car is worth) Your buddy gets $2000 for his piece of junk... but for some reason he's smiling... you figure its because he thinks he got pretty lucky selling that for $2K. You on the other hand got $10,000 for your car, for you knew that your little Honda had one of the best resale values of any car. But wait.... how come the automatic teller did not give you all your money.... you only got $2000 back.... what's that on the bottom??? Oh yeh you still owed the bank. Now your buddy is really rolling on the floor laughing, and he jumps up, punches in the code on the computer screen and just buy's you little Honda that you just traded in. You see while you were sending THE BANK $350.00 a month for the last 3 years, your buddy has been putting $350 a month into a savings account. Now after 3 years, you've spent $12, 600 and have $2000 to show for it, and your buddy has spent a total of $7,000 and has $10,600 to show for it.

Grudgingly you take your $2000 and buy that 16yr old taurus, hoping that you learned your lesson....maybe in a few years you too will be able to save up for a nice car.

Answer 5

Wow what a small world I turned 18 today. I really don't know what to do today. I already have a car. By the way what kind of car are you getting? I seriously suggest a Toyota or Honda if you can afford it. Best of luck

Answer 6

You need to see if you can arrange your financing in advance. It gives you an added bargaining tool to lower a dealer's offered rate(if possible) and also allows you to shop within a reasonable budget. Most car places will steer you to more than you want at first, to create that "hunger" for more.

Answer 7

If you belong to a credit union, see what they'll give you, instead of doing two loans. Ask your parents, or anyone older you trust who probably has good credit, to be a cosignor. You'll probably need one anyway.

Answer 8

Yeah its now not unlawful because of actuality that your age difference is only 2 years, optimal states is a difference while you're like 4-5 years appart. the father and mother are the only ones that would desire to extremely press expenses too. BTW those human beings affirming each and every and all the flaws approximately now not being waiting to have "kinfolk" anymore are incorrect. only google statchetory rape observed via employing the state you reside in in case you like extra records.

Answer 9

Why take out two loans? just do 1 ,a lot simpler. Can you get a parent to co-sign? you can get a lower rate. I have done this for my sons.

Answer 10

happy birthday have a party and register with the selective service its the law