New to loans?

Okay, since this wasn't taught in class and I live with my old school grandparents, I need help with figuring out loans. I just got a job at walmart and need a loan for a vehicle. The one I'm using doesn't belong to me and its near due to return it. The problem I have, is I don't know much about loans. I dont think I even have a credit yet. I dont even have a bank account yet. I need guidance. As soon as I get my MasterCard, I plan to get associated with a bank. Then what? Do I need to build my credit up first? How long do you think it'll take before I can get a car loan? And after I get this loan, how does it work? Does the bank give me cash up front? Please don't be irritated with my questions, I'm a kid turning into an adult.


You need to build up credit first. When you get a car loan, the bank gives you a check that is payable to the car dealer (not to you personally). They do not give you cash. This is to make sure that you spend it on a car and not on something else.

real estate guy

Go into the bank, open up a checking account and savings acct. Then talk with the bank about a car loan. When you find the car you want, the dealer will call your bank and the bank will give the dealer the money. Also car dealers also have financing departments and can give you a loan. HOWEVER< Do not get in debt. Save up several thousand bucks and buy a used car for cash. Then continue to save what you would have paid for the car each month.

Steve D

Yes, you will need credit to get a car loan. It can take anywhere from a few months to a few years to build up enough good credit to get a loan - the less established credit you have, the higher risk you are and any resulting auto loan will have a higher interest rate which means you end up paying more. You can establish credit by acquiring a credit card, using it and making all your payments on time. The best way is to get the credit card, use it for small purchases (i.e., gas), never go over 30% of your limit, and paying off teh balance each month when you get the bill. Do NOT make your payments even one day late. Before getting the card, establish a bank account, not after you get the card. Sit down with a personal banker at that bank (btw, get direct deposit when you get that job you will need) and talk to them about establishing credit. Finally, you will not get a car loan up front - you need to pick out the car first and tell the dealer which bank you want to work with (ask if the dealer can get a better deal - but talk to that personal banker at your bank first). No one will lend you money up front since whatever car you pick out will act as collateral for the loan and money up front takes away that option. And just so you know, collateral means the lender has a claim against the vehicle and can take ownership if you do not pay the loan back on time.


To get a grown up car loan, you need a good grown up full time job with good grown up income over $2000 a month. You also need prior good credit. Say 9-15+ months of credit card payments but they too tend to want good credit and a full time job first. I had trouble getting a mastercard or visa on my own and I made things worse because I kept applying, not knowing that every inquiry hurt my chances. Eventually, I asked my bank who told me they had a deal where my dad would cosign and if I went a year without being late, he would drop off and it would be all mine. I have no idea if that was true or not because I was never late. He put the fear of god into me. (He, of course, had good credit and income) A lot of people have their parents finance their first car. Way back when, it used to me $2000-3000 cars. With interest rates low, most places don't want to fool with car loans below $7500. Which means you may have to save your money for a long time to be able to afford ever a low end car for cash.


You just got a job. You're not going to be getting a loan for at least a year. The bank does not give you cash up front. They will pre-qualify you so that you know about how much you can spend. Once you've selected a vehicle, they will determine if it's worth the loan you are asking for, and then write the check to the dealership.


First - you need work history. Most banks or other types of lenders won't loan you money until you have at least six months working with the same company. Second - for an auto loan, they prefer to see some other form of credit history already established. This means getting something like a secured credit card and using that to build up some credit history before actually trying for an auto loan. This could also take six months to a year. Third - you could ask a parent or very close family member if they would co-sign with you on an auto loan. That might get you past the second step if the family member has good credit history. Fourth - start saving some money. If you have a down payment for the car so that you don't need the full loan amount, you will be more likely to get a loan. Fifth - remember that besides the car loan, you will also need to pay for insurance, so be careful of your budget. Some car lots offer financing at the lot. They are considered "buy here/pay here" lots and they have horrible interest rates and used vehicles that have high mileage and will likely break down often or by the time you pay it off, the vehicle will be so old that won't be worth maintaining. Avoid these if you can. Other car lots will help you find financing through a bank or finance company. These companies will base their interest rates on your credit history. Most of these companies require a credit score above 600 and above 650 is preferred. So, you don't have to actually find a bank to give you a loan. You just need to find a car dealership that is not a "buy here/pay here" lot and ask them about their financing options. They help you get the loan. The money goes directly to the dealership in most cases. You rarely ever get the money for the auto loan. Even if you go to your bank, the bank would want to know who you was buying the car from and they would check everything out before setting up the loan. One last thing. When you find a dealership you want to work with to get an auto loan, be sure to mention that you have little credit history and ask them if they think they can help you get financed. You don't want to just give your info and let them run a credit check because that HURTS YOUR SCORE. If they understand your entire situation BEFORE they run a credit check, they will start with the finance company that is most likely going to give you a loan instead of running it with a finance option that would be likely to reject you.

A Hunch

Your "old school grandparents" understand loans. - you have a job paying $10 an hour that you just started and you have no credit history = You an ineligible for a loan. - if you are unable age 18, you aren't even legally eligible for a loan. You take public transportation or human-powered transportation (bike, feet). You save money and then buy a car with cash. It might be a jalopy that costs $1000 but it gets you from point a to point b for awhile. Bank of America has free online money management programs for young adults. This will teach you how to manage a bank account and save, as well as start to build credit.

No Mercy

all bullsht answers here. if u want to buy a car u go to a car dealership, choose a car u want and TALK TO A SALESPERSON. explain all your situation and they will PRINT U ON PAPER how much down payment u will need to give them and how much will u pay per month. sometimes there is no down payment , sometimes there is a balloon payment at the end, if u bring a large down payment and have a good credit and a permanent job your interest rate will be lower than when u come with no credit history and no down payment. it ALL will be explained to u by either a person in a bank or a car dealer who also sells loans. loan in a bank is usually cheaper, but not always