Buying a car is the dream of many young people, as it represents comfort, freedom and independence. However, for many of them, obtaining financing can be complicated, but it is not impossible.
So how do you go about it? In the following article, we show you how to finance a vehicle when you are young.
What is a vehicle loan?
The purpose of this type of financial product is to provide financing for the purchase of a vehicle. It should be noted that it is not only offered through banks, but also at car dealerships.
It is therefore essential to evaluate and compare the different vehicle financing options available on the market.
Conditions for accessing a vehicle loan
- Adequate monthly income
It is necessary to prove to the bank that you have a constant and sufficient income to meet the monthly loan repayment.
- Down payment
The amount that must be paid as a down payment depends on the bank from which you apply for the loan. Currently, some banks offer loans with the option of not paying this amount, others may require a minimum of 20%.
- Favourable credit history
A good credit history means that there are no outstanding debts with other banks and no late payments.
- Minimum age
To access their financial products, in general, most banking companies establish a minimum age of between 20 and 22 years, in the case of those who work as employees, and 25 years, in the case of the self-employed.
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How to obtain a vehicle loan when you are young?
The requirements to access a vehicle loan and be able to acquire a new car in our country may be different depending on the financial institution where the loan is requested. However, some of the most common ones are shown below:
- If the person works as a dependent, he/she must be at least 22 years old and have been working for at least 6 months.
- If you are self-employed, you must be at least 25 years old and have been self-employed for at least 2 years.
- Have a minimum individual net monthly income of S/. 1,800.
- Have no outstanding debts or unfavourable credit history.
- Have a valid ID card.
How to buy a vehicle with credit?
To buy a car through a vehicle credit when you are young, you have to follow a series of steps that will make it possible for you to make the purchase efficiently. First of all, you have to choose and decide which model of vehicle you want and look for the dealer that has it.
Then, compare the price between different dealers to find out which is the best alternative for you. Once you have chosen the car and made the price comparison, it is essential that you determine how much you can afford to pay on a monthly basis without affecting your financial situation. Here it is also important that you establish the term of the loan, i.e., how many years you would have to pay it back.
Next, find and choose a financial institution that offers you a low interest rate. To do this, compare the rates offered by different banks and select the best option. Once you have done all this, apply for the vehicle loan!
5 tips for buying a car when you are young
- Set a budget and a savings goal
Before you start looking for financing to buy a car, it is essential to set a budget and a savings goal. The budget should include your monthly income and expenses to determine how much money you can afford to pay for the car.
The savings goal, on the other hand, refers to the amount you want to save for the down payment.
- Research different financing options
Many financial institutions offer vehicle loans. It is important to research each alternative and compare interest rates and payment terms before making a decision.
- Improve your credit history
A good credit history is essential to get financing at the right interest rate. Young people can improve their credit history by paying their debts on time, maintaining a low level of indebtedness and avoiding frequent borrowing.
It is also recommended to have a credit card and to use it responsibly, i.e. to make full monthly payments and not to exceed the credit limit. In this way, you will demonstrate that you can afford to repay the vehicle loan.
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- Save for the down payment
The down payment on the purchase of a vehicle is the amount that is paid beforehand to guarantee its acquisition or it can also be used as part of the financing of the vehicle.
This payment has the ability to reduce both the monthly payment and the total cost of credit. It is important to keep in mind that the larger the down payment, the lower the amount of money that will have to be requested through financing.
- Make payments on time
Once you get the vehicle loan and buy the vehicle, avoid making late payments, as this will contribute negatively to your credit history and make it difficult for you to obtain other loans later on.
So far we have seen everything you need to know about financing a car when you are young. As you can see, this can be a challenging task, but it is not impossible. With proper planning and meeting all the necessary requirements, you can get the car of your dreams!