What Is a First-Time Car Buyer Program?

Guides on how to buy your first car, like silly cat videos, abound on the internet. However, first-time car-buying programs work a bit differently. Unlike traditional car loans, these programs work with first-time buyers to qualify them despite their lack of credit. Though lenders may relax good credit history and score requirements, additional qualifications may apply. 

For instance, first-time car-buying programs can help those with poor credit scores if they agree to a down payment, show employment history, obtain a cosigner, and demonstrate car insurance coverage. First-time car buyer programs often come with higher interest rates than average compared to traditional auto loan options, but they can still help you build credit history as you make on-time payments. 

Some first-time auto buyer programs even let you adjust your auto loan rate after making so many on-time payments. Qualifying for a first-time car-buying program can limit which vehicles you’re eligible for, but those restrictions typically work in your favor to keep costs low. 

Adults over 18 are eligible for first-time car buyer programs. You must also meet the specific credit requirements for this type of auto loan, which can vary between lenders. For example, some lenders consider a credit history less than a year old adequate grounds for “first-time” status, while others don’t have credit requirements at all. Most first-time car buyer programs are aimed at college students and graduates.  

Many lenders offer first-time car buyer programs alongside traditional car payments, including: 

• Banks: You’re more likely to get approved if you have an existing relationship with a bank. However, banks make qualifying for first-time car buyer loans the most challenging. Read the fine print carefully to ensure the car you choose fits the bill. 
• Credit unions: As a members-only financial institution, credit unions require you to join before being evaluated for a first-time car buyer program. However, many state and local credit unions offer better terms for members than you’d find elsewhere.  
• Third-party or subprime lenders: Though they usually come with higher interest rates, first-time car buyer loans from third-party lenders can help you comparison shop and bargain. 

Manufacturers also offer first-time car buyer programs: 

• Chrysler Capital, the financing arm of FCA that owns Jeep, FIAT, and Ram, works with first-time car buyers to maximize their budget for a car that fits their lifestyle. 

• Toyota offers a College Grad Program that offers rebates to recent graduates who may be purchasing their first car. 

• Audi’s First-time Buyers Program doesn’t require buyers to have a credit history to apply.  

Offering this type of car ownership program helps dealerships build loyalty, boost sales, and make a memorable first impression on what could be a lifelong customer. Some manufacturers will limit first-time buyers to used cars, but qualified candidates may be able to prove themselves worthy of a new car. 

The first-time car buyer program application process contains similar elements among lenders, though it may manifest differently. Here are the basic steps involved in applying for a first-time car buyer program: 

1. Identify and evaluate available first-time car buyer programs via an internet search. Make a short list of candidates to review further. 
2. Compare specifics, from what credit score is needed to buy a car to what interest rates and loan terms exist. If you can’t find this information online, call and speak to a representative to learn more. Request details in writing if possible. 
3. Check your credit score and report. Identify areas where you could improve your score and decide if now is the right time for a car purchase. 
4. If you decide to move forward, approach a dealership with various offers and begin negotiations on your chosen car. Agree upon terms, including a price. 
5. Begin processing the necessary paperwork. Copy, scan, fax, email, or mail the appropriate documents.

Buying your first car can bring a rush of emotions. Remember that a first-time car buyer program exists to help you make sound personal finance decisions, so keep up the good work by making on-time payments. 

The beauty of first-time car buyer programs is that you can buy a car with no credit without paying an astronomically high interest rate. Credit aside, you can use your employment, down payment, and cosigner to obtain a lower interest rate and better terms. This multi-faceted approach works well in your favor. 

First-time car buyer program lenders typically offer loans similar in length to standard auto loans. However, they may limit how much you can borrow. Down payments can be as low as $500 or up to 20% of the purchase price. 

Cosigners can help you get a low rate to pay less for the car over the life of the loan. In addition, lenders want to see steady employment for at least the last three months. While full-time monthly income isn’t necessarily required, you should make enough to offset the cost of your car payment on top of your daily living costs. 

Don't sweat if you struggle to find or qualify for a first-time car buyer program. This isn’t the end of the road. Instead, you can take the following actions: 

• Dig deeper: Besides first-time car buyer programs, many dealerships offer programs catering to specific audiences. If you qualify for another program, you could save even more. 
• Wait and build up savings: Purchasing a car outright can help you avoid the hassle of credit scores and reports, down payments, and interest rates. If you can’t qualify for a first-time car buyer program, build up your cash stash until you’re ready. 
• Consider leasing: Leasing a car instead of purchasing it outright can help you experience the benefits of a new car without the commitment. In addition, you can also assume a lease for a few weeks or months to see what a car’s like before making a purchase. 
• Work on your credit: When one door shuts, your ability to work on your credit opens up. Take this time to improve your payment history with on-time payments, dispute any discrepancies to your credit report, or pay down debt. The higher your credit score, the less risk you pose to lenders and car dealerships specifically.

Working with a strategy can help you better approach car ownership to set yourself up for success. Buying a car isn’t something you should take lightly, especially if you want to use it to build your credit, invest in a commodity, and enjoy the freedom of your own set of wheels. 

brand-new vehicle as your first vehicle purchase can feel empowering, but it might be an expensive mistake. As a first-time car owner, there are several advantages of buying a used car to consider, the least of which are cost and depreciation. 

New cars are the most expensive set of wheels on the lot. After all, they represent the latest and greatest technology, performance, safety, and aesthetics the manufacturer offers. However, new cars are also the fastest to depreciate when driven off the dealership lot. The same risks aren’t attached to used vehicle. 

What if there was another way you could drive newer cars without the price tag? FINN car subscriptions offer a happy medium between like-new and affordable. FINN’s single monthly payment integrates insurance, registration, depreciation, and maintenance, so you pay one fee instead of many. Plus, once your subscription is up, you have your pick of vehicles before starting the process anew.