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How to Get a Car Loan at 18

Getting a car loan at 18 can be tricky. Lenders are going to look at your lack of a credit history as a major stumbling block, but that can be overcome in a few different ways. Let’s look at them in detail below.


The first option is a co-signer. A co-signer is usually a parent or close relative who has an excellent credit score and a long history of on-time payments. Using a co-signer will allow you to take advantage of the lowest possible interest rates, since interest rates are based on credit scores at most lending institutions. Just keep in mind that this is a significant commitment on the part of the co-signer, typically one of your parents. They are, in effect, agreeing to be responsible for repaying the borrowed funds if you run into issues doing so.

Special Finance Company

A second option is to do some research and find a finance company that specializes in bad credit/no credit auto loans. There are plenty of companies offering these types of loans at this time. Unfortunately, since you will be considered a high risk (having no credit history), you will have to pay a higher interest rate. Go here to apply online, and we can put you in touch with a finance specialist who can help you assess your options and find a lender willing to approve you for financing.

Establish Credit

A third option is to do some active waiting. By that, I mean you will be waiting to get a car loan, but actively building a credit history. You could start by applying for a traditional credit card. If you are denied, then you can obtain a secured credit card. With these cards, your credit limit is set by the amount of savings you deposit with the issuer of the card. The credit account will appear on your credit report. After at least six on time payments, your score should increase significantly. You would see more of an increase after 12 on-time payments, though.

Lastly, keep in mind that most lenders require a minimum, pre-tax income of $370 per week. This requirement may be waived if you have a co-signer with sufficient income to vouch for you. If you do not earn this much, and don’t have someone to co-sign, you may be better off saving for the cash purchase of an inexpensive vehicle.

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About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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