It is defiantly possible for a teen to get a car loan but it is really hard to do on your own. There are a few barriers that will slow or stop the process for you to get one. I’ll discuss these hurtles that you need to jump through to get a car loan.

Getting a Loan at Car Dealership

Salesman will have one or feelings about working with a teen on a loan. They may think that it is not worth working with you because you most likely don’t have a good if any credit history to see if you are a good risk. They also may want to take you for everything they can because of you lack of experience.

You need to know how to play the game so you don’t get burnt. I’m not going to go into all the detail you need to know about buy a car in this article, but there is many places you can google to find out how to not get cheated with a car salesmen

No Credit History

This in my opinion is the thing that stops most of the teenagers out there from getting the car they want. They have these big dreams of walking up to the nice salesman or loan officer and saying I need money to get my dream car and they just cut them a blank check. They get a very rude awaking. They find out that they are not ready to give them any money at all until they can show some good credit history.

To avoid this you need to check your credit before you go for a loan. That way you can fix any problem before the loan officers see it. You need to know more about your credit then they do.

Just remember that a credit score below 640 it good grounds for not even trying to get a car loan. You could go for it though if you had someone that was willing to cosign for your loan.

Dealing with the Added Cost of Owning a Car

This is a big one to consider. You know only need to pay for a car loan now, but your need to pay for its up keep. I’m not just talking about changing the air freshener every month.

I’m talking about the additional $80 to $100 a month for gas. Oil changes every 3000 to 5000 miles. Believe me you can drive that far very fast.

There is also the insurance that you need to have to drive the thing. Yes you pay for the car and the right to drive it. This cost can vary.

If you are a teenager your insurance will be higher automatically. If you are a male under the age of 25 and not married it will be even higher. This can cost upwards to about $5000 a year.

Why you ask? It is because teens have a higher car accident death rate between the ages of 16 to 25. Make sure you can handle all that is involved before you go for that dream car of yours.

A lot of times in the financial world we take risks—with stocks, bonds, loans, etc. But how big of a risk is co-signing a loan for someone? There are many different things to consider before signing any paper work and depending on the person, it may not be that big of a risk.

When you co-sign a loan, this means that you are telling the lender that you are just as responsible as the person who is getting the loan. It also means that if they can not make a payment, the lender will look to you to make that payment. It also means that if the loan is not entirely paid back, the lenders will expect you to pay back all the money. This can be very overwhelming and very unexpected, especially if you are not getting any thing back by paying the money for your friend or family member.

Generally lenders only require a co-signer when a person has little or bad credit. If your friend has had trouble paying back loans in the past, do you think they will have trouble paying it back now? Do you really trust this friend to be able to pay you the money if you end up making payments for them? Make sure that you really know all the details of their credit history before volunteering to cosign for them.

If a person does not pay back their loan, the lenders will generally expect you to start paying back the loan before they take any legal action on your friend. This may also effect your credit score if your friend does not pay back a loan that you have co-signed. Having your name on the account shows the lenders that you have good credit but as soon as it is defaulted on, your credit score can change drastically.

There are a few things you can do to try to prevent a disaster if you do decide to co-sign a loan for someone. Make sure it is someone you really know well and have good communication with. Ask them or the creditor to please contact you when a payment is missed so that you can be aware of it. Take note of the amount of the monthly payments so that you can see if you would be able to afford it if your friend does end up missing a payment. Get copies of all the important documents and read them through thoroughly. You are just as responsible for the loan as your friend is.

Also, make sure you get a copy of the co-signers notice. It is a legal document outlining your role in the loan. It can help you by knowing a lot of the details before signing your name on anything. Co-signing a loan can be risking, but as long as you know the person well and know all the background, you should be fine. Just remember that co-signing a loan is a serious deal and should not be taken lightly.