Anonymous asked in Business & FinanceCredit · 1 month ago

How long does it take to build enough credit from scratch (18 y/o) for an auto loan?

Hello, I am turning 18 soon, and I am interested in purchasing a car for myself as soon as I can. I have been working almost full time since I turned 16. I am going to apply for a credit card on my 18th birthday. the car is going to be around $30,000. I can put anywhere from $0-$15,000 down for the car. I have a feeling that the down payment will effect the likelihood of me getting approved, as the size of the loan can vary around 15k. can anybody give me an estimate on how long I will have to make payments on my credit card before I have enough credit to be approved? Thank you for your time.

5 Answers

  • RICK
    Lv 7
    3 weeks ago

    I got my first car loan about 5months after by 18th birthday

  • 4 weeks ago

    Kid, this isn't going to happen!

    You can only start to build credit from 18. So the fact you worked at 16 is irrelevant.

    By all means apply for a credit card at 18, but the only cards going to accept you are those for people with no or bad credit. And if you think you can get a 15k limit or anywhere near that you are in for a wake up call. You will be lucky to get a $500 limit.

    You need to be more realistic about your first car

  • 1 month ago

    For an auto loan, expect the bank will want three years of banking history, earnings history, & credit history. And if you want to get such an expensive new car, instead of a used car about 2-5 years old, expect to put $15,000 down, and still have sufficient savings in the bank to cover 3-6 months of car payments. Due to your age, you may still need to get a cosigner, especially for such an expensive car. How much do you EARN? That's a major determinant in how much you will be allowed to borrow AND your interest rate.

    Rule of thumb: never spend more than half of one year's earnings on a car; put at least 25% down (new car depreciates 25% just driving it off the car lot) in addition to taxes, registration, insurance; never loan term more than 3-4 years (interest adds too much to the cost of the car); and plan to keep the car for at least 10 years. To afford a $30k car, you should be earning at least $60k/yr. Even if you pay $15k down.

  • 1 month ago

    First, if you apply for your first credit card on your 18th birthday, you probably won't be approved.  Most places don't approve anyone under 21, especially if they have never had one before.

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  • Anonymous
    1 month ago

    Please, please don't blow 15k you don't even have on a depreciating asset like a car.

    Buy a 15k used car for cash.   Put the car payments into a Roth IRA S&P 500 mutual fund. 

    You can make someone else rich by spending all your money plus money you don't even have on something that is going to be worth NOTHING someday.  Or you can pay cash for a decent used car, drive it for ten years and invest your car payments and make yourself rich.

    With 15k down, it won't be too hard to find someone to lend you the rest.  But you'll pay a high interest rate with no credit.   In my state just the sales tax on a 30k car is 3k and tabs another 1k.    So you'd either need 20k cash or you'll be borrowing 20k.   That 30k car is going to cost you 40k and by the time you have it paid off in five years, your 40k car will be worth about 15k.    So save yourself the 25k and just go buy yourself a 15k car for cash and invest the other 25k for yourself.  

    In 40 years that 25k will be worth 1.6 million if invested.   Wouldn't you rather have 1.6 million and a decent used car?     It's a no brainer.   You're off to a good start with your savings.   But you're on the brink of royally screwing the pooch.   Don't do it.

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