A Complete Auto Financing Guide for First-Time Car Buyers

Buying a car for the first time can feel like a rite of passage. Maybe you’re transitioning from borrowing your parents’ car as a teenager to having complete autonomy—emphasis on auto—to purchase a vehicle that best fits your needs, lifestyle and budget. Or, perhaps you’re tired of leasing vehicles every couple of years and are ready to buckle down and drive something you can call your own.

As exciting as buying your first car is, it can be a bit overwhelming. There are a number of steps in the car-buying process that will require research, knowledge of your credit history and paperwork to provide and/or fill out at the dealership. If you plan on buying your first car soon, here are some answers to questions you may have before you begin your car-buying journey.

How can I get auto financing to purchase a car?

Financing your first car purchase involves borrowing money from a lender or receiving financing from a finance company and entering a contract to pay the money back over time, usually in monthly car payments. Getting financed through a bank, credit union or finance company are typically the most common ways of purchasing a vehicle. While car buyers with higher credit scores typically qualify for more traditional auto financing options, car buyers with bad credit or no credit history established can still qualify for subprime financing.

To know which types of auto financing you may qualify for, you need to have a good understanding of your credit history. This can be done by checking your credit report and credit score, which are usually available through the three major credit reporting bureaus: Equifax, Experian and TransUnion. You may obtain one free credit report from each of the big three credit bureaus every 12 months, by visiting annualcreditreport.com.

What’s the best way to start the car-buying process?

1. Do your research.
   When you’re buying a car for the first time, it’s wise to do as much research as possible before making your first car purchase. Conducting a thorough assessment of needs (i.e. more space, gas efficiency, etc.) will help you narrow your car search and determine which vehicle best suits your needs. In addition, browsing dealership websites and reading online reviews on sites such as Kelley Blue Book or Consumer Reports is a good way to gain valuable insight into the features and benefits your potential car has to offer. The more you know beforehand, the more confident you’ll be when it’s time for you to make your first car purchase.


2. Establish a budget and save for a down payment.
   Knowing how much car you can afford is another important step in the car-buying process. Evaluating your monthly expenses (i.e. mortgage or rent, utilities, student loans, cable and Internet, etc.) can help you determine how much of your budget can be allocated towards a down payment and monthly car expenses. This article provides some great tips on how to save and budget for your car purchase.


3. Start your credit approval.
   Once you’ve done your research and established a budget, it’s time for you to start shopping around for financing options. As we mentioned earlier, you may want to check your credit report and score to determine the auto financing you may qualify for. If you have a positive credit history, you may qualify to get preapproved for a traditional auto loan. If you’re a first time car buyer with bad credit or no credit history established, you may qualify for subprime financing. Credit Acceptance is an indirect subprime finance company that works with more than 12,000 car dealers across the nation to help credit-challenged car buyers get approved for financing. Once you fill out the form on our website, we will connect you with three enrolled dealers in your local area that can help you start your credit approval to purchase a vehicle.

What documents should I bring to the dealership?

Once you’re ready to make your first car purchase, there are items you should bring with you to the dealership:

1. Pre-approval certificate (if you qualify for more traditional financing, such as from a bank)


2. Driver’s license


3. Proof of residence, income, bank account and insurance


4. Title and current vehicle registration (if you are trading in your vehicle)

Should I buy a new or used car?

This totally depends on your needs, preferences and budget. If you want to save money and don’t mind doing some extra research (i.e. checking the vehicle history report, car service records, etc.), buying a used car may be the better option. However, if you’d rather skip all the extra legwork and don’t mind spending a little more money, buying a new car may be the right choice for you.

Credit Acceptance enables enrolled dealers to offer vehicle financing on nearly any new or used car for first-time car buyers with little to no credit history established. And, with on-time car payments, you can improve your credit and move on to traditional financing. Simply fill out the Start Your Credit Approval form on our website to get started!