Post # 1
- Wedding: May 2012 - El Faro Convention center, Aguadilla, Puerto Rico
The Boas are looking to buy a new car ASAP. Problem is neither of us has any credit… as in not bad just non existent. We were already turned down at a dealer because we couldn’t give the $10,000 they required for a down payment.
We visited another dealer and after a bit of a hassle they agreed to finance tha car with only $500 down but they are offering us 10% APR. After a bit of research online it seems like it’s not such a ludradris APR since it’s seems some people with no credit history get 15-25% APRs.
Right now we are leaning towards buying the car, building up our credit and in 6 months refinancing at a lower intrest rate. We want to buy a house this year and I’m forseeing that if we had such trouble getting approved for a car loan without credit a mortgage will be next to imposible.
Id love to hear you guys thoughts 🙂
Post # 3
Check with a local credit union. They’ll often have lower interest rates than dealers.
Post # 4
Yep. I mean if you have no way to prove you’re a worthy borrower and you don’t have considerable cash..they aren’t going to loan easily.
I second the idea of credit union. If that doesn’t work, you need to build up your down payment.
Post # 5
First, get a credit card! Start making small purchases on it and paying the bills. You will slowly start building credit. I don’t believe you can get a mortgage without credit, so definitely start trying to build up both of your scores now (both of your scores will be taken into account when determining the mortgage rate).
A 10% APR is pretty high, but they have to do it like that to ensure that their cushion their loss. Your credit score is a measure of how well you pay your bills, and with no credit score, they can’t base their decision off of anything else.
Post # 6
I second this.
Get a credit card, treat it like cash. You’ll at least have something then within a few months and can hopefully get a lower APR then. And see if you can loan through a credit union.
Post # 7
Get a credit card and pay it off every month. Check with your current bank to see what their rates are. 10% is mediocre but it may be the best you can get for now. Even with great credit, my new car was at 9%. I wanted a cash off incentive and had to sign up for the dealer’s financing for at least three months. Then switched over to my bank which gave me 2.75%. My bank also gave me discounts for having a checking account and direct deposit. I doubt you’ll be able to get a good mortgage rate with no credit history. Maybe when the time comes, look into first time buyer programs.
Post # 8
oh yeah, didn’t see you were going after a house too. Honestly, if you can’t afford to put a down payment on a car right now, waiting a while on a house might be good. I get really nervous at people putting little to no down payment down (just assuming you don’t have much based on the car comment). So easy to fall behind and get in trouble that way!
Post # 9
Definitely check at a credit union or your bank. I work at a credit union and we do try to help people with no credit history. But what you are thinking about doing is also a good thing. We have a lot of people that come in to refinance after a couple months of going through the dealer or another financial institution. Only bad thing is that they will be able to see how many times your credit has been checked because a lot of times when you go to a dealership, they will run your credit through multiple companies.
Post # 10
- Wedding: May 2012 - El Faro Convention center, Aguadilla, Puerto Rico
Thanks for the suggestion 🙂
We really can’t afford to wait a few months. We just moved to Cincinnati a city that is not well known for its public transportation and we really need a car to be able to move around.
We don’t plan on buying a house RIGHT now, just in the next year. The reason we don’t have enough for a down payment is my husband doesn’t start work until Sept, so we are a 1 income household right now. He will contribute 60% of our household income so once he starts working we can defenitely save up more than the $1000 I save right now.
Take in account we are both recent college graduates who just moved to a completely new city which makes everything even more complicated :$
Extremely grateful for the advice
Post # 11
I second the credit card advice, if you don’t build credit you won’t be able to get a loan for a house, down payment or not.
Post # 12
I definitely agree with looking around at banks and credit unions. Perhaps an option may be someone to co-sign who has good credit. Sometimes places will accept this if you and hubby have the income to back it up, just don’t have the existing credit. Then perhaps in 6 months or whatever once you build up credit you can refinance in just your names and take the co-signer off. Credit cards are definitely a good way to build credit though, even if it is in addition to a vehicle loan.
When it comes to buying a home…look for 1st time home-buyers programs as well. You will likely have to take classes where the teach you responsibility etc but they will also typically work with you.
Post # 13
My DH had the same problem fresh out of college he never had a credit card and this was right when the market fell so loans were hard to come by in general. I had him get a credit card and he used it for a couple months and then he applied to a bank (big one) and he got the loan at 3%. If you can wait a couple months, I would suggest getting the CC and waiting a couple months then apply to banks on you own. When we went to the dealer they quoted us some outrage interest rate as well but we already had approval so it wasn’t an issue. It will save you some dough over the long run if you can get the interest rate down. When DH bought his car he put 10% down. Good luck.
Post # 14
@Mrs. Boa Constrictor:
You’re not going to get a home loan without credit scores, so i’d really put that goal on the back burner. Your husband’s short job history will also work against you there. Get the car, make payments on the car for a year or two, get a credit card, do the same. Build up a credit history. Save 20% down for the house. THen go house shopping. Being in a brand new city, right out of school is a recipe for buying the wrong house. Check out the area, get settled in life a little before you do the big house purchase.
Post # 15
As a recent graduate as well, try going through Honda. I have not so great credit and I got an interest rate of 4.9% and I only put $600 down and traded in my other car.
Post # 16
You definitely need a credit card! My parents made me and my sister apply for credit cards when we were 18 just so we could establish our credit at a young age. Don’t ever miss a payment! A line of credit is another good option to build up your credit rating.
If one of you has better/worse credit than the other a joint mortgage is hard to come by. And the interest rates on a mortgage will hurt waaay more than the interest rate on a car payment IMO.
Try General Motors for a car payment. They used to have a program where they made a couple payments for you if you were a student or recent grad. That would definitely help your savings department. Put those payments amount into savings.