What are the chances I, as a college student, will be able to successfully finance a new car?

Hi guys, I'm a full time second-year college student with a part time paid internship on the side in which I get paid slightly under 500 dollars a month. I have about 2000 saved up in the bank and was looking at a new car that runs about 15-16k. I know nothing about how financing a car works other than the simple down payment + monthly payments (with interest). I'm wondering if it's possible for me at all to finance a car like this and what the application process is. Thanks a lot!!

What are the chances I, as a college student, will be able to successfully finance a new car?
First time buyers are the hardest deals for a dealer to get approved. Ford and GM are known for putting first time buyers in cars just to move units. With the right down payment, job time, and time at residency, just about anybody could qualify for a loan through one of the aboved named banks. Ford Credit owns Mazda Credit also.....so you could look at any Ford, Mazda, or Gm Product and probably find a car/truck at a low rate. Don't think just because your friend got approved on their deal when they were a first time buyer, that your deal will be the same. Markets change all the time and banks become more aggresive during different parts of the year.They will sometimes give you a loan because the dealer has sent them a bunch of excellent credit worthy customers and they can afford to throw in a "high" risk first time buyer. It is actually easier for a dealer to get a bad credit person approved than a first time buyer, unless the first time buyer has a substanial down payment. Any good Finance Manager should have a bank that will buy first time buyers. The problem will be your income though. There are plenty of finance people and dealerships that create ways to get people like you approved. Do you have any other income at all? Do you do any side work? If not, not all banks will require you to prove your income. Another thing is if you take home $500 dollars a month your are grossing probably $750 a month. Banks go by gross numbers. You can also get a co-signer on the deal with you. A friend, family member, or significant other can help get you approved. When it comes to financing a car, your credit score is the single most important thing. If your score is over 700, there are a lot of banks that will give you what is called an "INSTANT APPROVAL". Banks use computer intelligent scoring systems to approve deals automatically. Anytime you are submitted to a bank for approval the computer intelligence tries to make a decision before any human ever looks at it. Sometimes the computer will give you and instant approval and then you can buy anything you want. I am a 14 year Veteran in the Automotive Business and I have seen this happen at countless times. I have had many first time buyers approved by the computer of the bank when I thought there is no way the person could get a loan.





As far as the process goes it is very easy. The best thing is to "Work your deal backwards". Don't go looking all over and driving cars first. First go to a local Credit Union or bank and try to get pre-approved. Then you will know which cars the bank will allow you to buy price wise. If you don't want to do that go directly to the Finance Manager at any given dealerships. They are always happy to pull your credit and advise what they think they can do instead of you spending countless hours with salespeople picking out a car, negotiating the price, and then filling out the application to get approved. Just go directly to the finance person at the dealership of choice and that person will help you. Now is the best time also. As the fall and winter months approach, dealership sell less cars which means less income for their finance people. The finance person will be highly motivated to get your loan approved and usually will try much harder than in a month they don't need the extra income because business is booming. I reallly hope this helps. Good luck and remember you can always get approved with the right co-signer if all else fails.
Reply:You will probably have to use a co signer like a parent. The main issue is going to be your income. Usually banks like to see about 1500+/ month but depends on the bank. I would get a newer used care with under 50k miles that about 3 to 4 years old.
Reply:If you have had your cc's for a while you should be fine.Trick is to not let your eyes buy a car your account cannot afford.You may not get the car of your dreams but you CAN get a car.As a first time buyer you'll have better luck in the new car lot as opposed to the used because of the way banks buy loans, Don't worry about that.New cars will give you warranties and the like and will reduce maintenance costs and will finance a lower rate .There is a state cap on new car rates in Fl. of 16.78% But almost double that in used car rates.New cars also have rebates.Your O.K just realize it is not the car you'll have forever and establish your credit, when you graduate it'll be easier to get the one you really want!!Good Luck
Reply:I'm sorry to say that unless your parents plan to help pay and/or cosign, there isn't too much of a chance. The loan on a car in that price range will probably be around $300-400 a month...which seems to be most of your income. They look at your car payment being less than 25% of your income, if you don't have any other payments.





You might have to hold off for a little while on a newer car. I'd look for one that you can purchase outright with the $2000 you have saved.





Good luck!
Reply:You may want to go used or find another job. With a 13k loan, at a generous 6% interest over a generous period of 6 years. The monthly payment is going to be roughly $215/month. Don't forget the additional charges of tax, tags, and title at purchase. As well as insurance. A financed vehicle will most likely require full coverage as well, and it would be silly not to have it on a new vehicle regardless of the financial institutions policies. If that isn't enough there's also gas and maintenance.





The good news is there are plenty of good used cars, and 70k mile examples of cars half the price of the ones you are considering are going to be much more fun than the current tanks. Find a car that was meticulously maintained by an enthusiast and has a solid community supporting it. Volkswagens are great for this, with communities like www.VWvortex.com crawling with people who know these cars like the back of their hand. It's a resource that usually goes unnoticed in lieu of reliability reviews and repair cost reports.





Recently I had a recurring check engine error in my Jetta concerning a 400 dollar part. A little research on VWvortex and a $5 can of cleaner later, no problems. I think that speaks for the value of it.





Edit: Also, be aware of the maintenance schedule on the vehicle you are purchasing. Some used cars may be coming up on needing new timing belts and other maintenance milestones. If you go the used route with a community, ask what you need to know before looking at one (do a search on the forums first) and maybe you can even find someone with some experience with them to come out and take a look at your potential car. If it's your thing, every dollar you save on buying a used car is a dollar you can spend on upgrades. Just do your research.