What You Need to Know About First-time Car Buyer Programs

If you’re finally ready to graduate from the hand-me-down ride you’ve been tooling around in, to your first new car, you may want to look around for special programs for first-time buyers. Here’s what you need to know about them.

You’ve done all the prep work. You’ve analyzed your budget, used free industry guides such as Kelley Blue Book to determine a car’s worth, and you’ve lined up financing before heading to the dealer. Now, you’re ready to buy.

LOOK AROUND FOR A PROGRAM

Before you do, why not check out a first-time car buyer program. Some car companies offer such initiatives, also called limited-credit programs. Now that you have in hand a pre-approved loan rate, when you’re using it to negotiate, it doesn’t hurt to ask the dealer whether it offers such a program. Each program may have its own requirements, however.

MAKE SURE YOU QUALIFY

Such programs particularly benefit those who have a limited credit history by allowing these prospective first-time buyers to finance without having a co-signer.

To qualify, some programs require a credit score of at least 610, and there can be no repossessions, foreclosures, debt charge-offs, or 90-day overdue accounts on your credit history.

You will also need to show verifiable proof that you’ve been working full time for at least six months, and that you have sufficient income to cover regular living expenses plus your car payments.

You also need to provide a minimum down payment of 10% of either the vehicle’s selling price or the manufacturer’s suggested retail price — whichever is lower.

KIA HAS A PROGRAM

Kia’s first-time buyer program, for example, requires would-be participants to have had their current full-time job for at least six months. If that’s not the case, then you need to come up with a qualified co-signer.

The automaker’s program also requires a credit history that’s bereft of bankruptcies, foreclosures, repossessions, collection accounts, charge-offs, tax liens, judgements, or any other delinquent credit. You also must show employment pay stubs or tax documents indicating that you can handle monthly vehicle payments and day-to-day living expenses, as well as any outstanding debt.

Participants must also have a total monthly debt to monthly income ratio of 50% at the most. If applicable, total monthly debt includes monthly vehicle payments, monthly rent or mortgage payments, or other monthly payment obligations such as installment loans, revolving loans, or alimony or support payments.

Kia’s program also requires buyers to have at least $1,000 for a down payment, which can include rebate cash. In addition, only certain vehicles are eligible for the program.

HONDA ALSO HAS A PROGRAM

Honda has a first-time buyer program, but only at specific dealerships. To find participating stores, you’ll need to research online or call around to area dealers. If you can get a manageable interest rate and you haven’t been on your job long, it’s a good idea to look into such a program.

Many experts agree that you should grab any financing under 5% that’s available. You can use the extra bucks you earn toward investments or erasing debt high-interest debts like credit cards or student loans.

Also, some manufacturers, including Kia, Toyota, Nissan, and Honda, offer special rebates and loans for college graduates. Contact your area dealerships to see if you qualify for such programs.

As long as you have a full-time job; a down payment; a blemish-free, if thin, credit report; a doable debt-to-monthly-income ratio; and a co-signer on deck just in case; you could be eligible for a first-time buyer deal. It never hurts to ask around to see what’s out there.

So, now that you have what you need to know about first-time car buyer programs, you could soon be out of the old beater and into a new ride.

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