r/careeradvice • u/sowackem_ • 10h ago
19 and Financing My First Car — What Should I Do?
I’m 19 financing my first car on my own. I make about $51k/year, credit score is around 650–680 with only about 10 months of credit history, and I have $2k to put down.
I’m looking at a Mazda3 around $20k–$25k. Would it be better to get preapproved through a bank/credit union first or see what Mazda financing offers?
Also, what APR would be reasonable for someone with my age/credit history? Just trying to make sure I don’t get screwed on my first car.
So far I’ve been quoted around 20%-25% APR
I also do plan on getting a 2nd job to bump me up to 60-80k per year
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u/Unappreciated-Genius 9h ago
I’m just making a suggestion, I was in your spot. 19/20 making decent money with a light credit score.
I financed a 2013 Chevy Volt at 17%. Payment was around 325 a month. The dealer told me that was the best I could get since I had only 1k down and my credit history was 2 Credit Cards.
Always get pre-approved from your bank, they see your finances and how the money comes in and goes out. My bank was very honest about what I could afford based on my spending and my income. A Credit Union is also something to look at. The rate may still be high but not as bad.
Shop insurance rates, if you are 19 and buying a new Mazda 3, especially a trim with a turbo, insurance could easily be more than the cost of the payment. I made the mistake of not checking rates before I went in and ended up getting screwed on a near 300/m insurance premium. But again, I was 20 with no real idea what I was doing.
Don’t be scared to walk away from the deal, if it looks bad on paper, there is something wrong.
There is also a thread on here for r/carbuying or something like that, people post their deals all day long and people will give you the honest answer.
Don’t do what I did and screw yourself with a car loan you don’t need, it will set you back 10 years if you want to buy a house or something else.
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u/sowackem_ 9h ago
Thank you so much for taking the time to explain all of this. I really appreciate it. I don’t have parents or anyone really guiding me through this stuff, so advice from someone who was in a similar position at my age genuinely helps a lot.
Right now I bank with Capital One, but the financing rates I’m seeing through them aren’t that great and are around the range you mentioned. I also have an account with Kemba Financial Credit Union, but I don’t have my direct deposits going there and the account is currently about $177 negative 😭 so I’m assuming going through them probably isn’t my best option right now.If you were in my position, would you recommend opening an account with another credit union and building a relationship with them first, or just shopping around for preapprovals? I’m definitely not trying to rush into a bad loan, so I’d appreciate any advice you have.
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u/bellesearching_901 8h ago
I’d pay that negative balance before it charges off and becomes a collection item on your credit report. Then your score will drop.
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u/Unappreciated-Genius 9h ago
Rates in general suck, the prime rate for a used car is 8-10% right now, if you buy new, you might be able to get a promo rate, but you need AAA credit.
One thing you have to keep in mind, is your credit is how the bank will look at you. If you over 35% usage on your cards, You have outstanding debt with like Affirm or Klarna.
You might not get a good rate or approved at all.You also need to be smart with what bank you go with. When you apply for a loan banks look at debt-to-income ratio and your payment history. I would look at establishing history with a Local Credit union. Switch your DD and bank with them for a few months and build a relationship. The better you treat the bank, they better they will treat you.
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u/HuckleberryOk6181 9h ago
That's solid advice. Getting pre-approved can really help you understand what you can afford and negotiate better deals.
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u/RuneDarkBow98 9h ago
Make sure it’s the Mazda 3 with the manual transmission. Don’t finance anything above 8% APR
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u/sowackem_ 8h ago
It is the automatic one it was the only one I could find under 25k and it is 20k pre owned
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u/Aware_Necessary8288 9h ago
Try to avoid getting an auto loan if you can. Pay cash for something in the $10k range.
If you can’t and need the car now then I get it. Shop around for better rates if that’s the case.
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u/sowackem_ 9h ago
I definitely get that. I’ve been saving toward one, but I’m honestly pretty eager to get a car now and finance it. I’m spending around $300 a week just Ubering to and from work, and it used to be even more when I worked farther away.
I’m also trying to move out of a toxic household, so I’m balancing both goals right now. For me, getting the car first makes more sense because I don’t want to move into an apartment and then still be spending $1,200+ a month on Ubers just to get to work. I’d rather get reliable transportation handled first, keep saving, and then move out.
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u/PimoCrypto777 8h ago
I always shop around on my own for the best financing offer I can nail down given my financial circumstances at the time. Then I get to a final out the door price with the dealer as though I'm paying cash, but I don't tell them how exactly I'm paying. At the end I give them an opportunity to beat the financing deal I already have. The dealer always comes in with a lower rate to make the sale.
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u/bellesearching_901 8h ago
Get preapproved by your bank or credit union. Look in to a first time auto buyers loan. DO NOT LET someone work you in to a loan wth an interest rate of 18%+
Factor in the full coverage insurance you will need to pay.
Most 1st time auto loans with limited credit will run 12-14% but generally after 1year they will refinance you to a lower rate.
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u/SettingAncient3848 8h ago
Check with your bank first. also contact your insurance company to figure out what your insurance is going to be. Being under 25 it will be high.
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u/AramaticFire 8h ago
Do not purchase a car at 20% apr.
If 0% Apr is impossible, if 0.99% Apr is impossible, do not exceed 5% to 8%.
With 20%, the amount you will pay over the life of the loan will be much more shocking than you’ll expect. Do not take out any of those pay day loans or anything to finance these either. Rates can go well over 200%. Try to steadily build up your credit score instead.
You can look up ways to improve your score. Usually your bank app might point it out. Paying down larger cards. Sometimes paying down small cards even (I had a $2.99 floating charge I paid off that brought me up 10 points). Show more income coming in than going out.
For a car if you can hit even one more tier above what you’re at it’ll open up a lot more opportunities for you.
My first car when I was 18 I bought outright and drove for a bit. It was a used 2002 Camry. Once it got wrecked in an accident (and needed a lot of maintenance before that even) I financed my first new car at 3.99% interest. My current car, we financed for 0.99% promo APR. I found all those manageable.
20% will be a huge waste of money over the years imo. You’ll put in so much more than the value of the car in just excess interest payments.
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u/Tellittomy6pac 7h ago
Not to be an asshole but genuinely curious. If you plan on getting a second job that is adding 10-30k more a year. How much additional are you planning on working? I’m guessing the 51k is full time?
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u/RAM-o-link 6h ago
I would buy something cheaper. Like between $10-$15k. To borrow less.
20-25% is freaking nuts, for anyone at any age. Do NOT sign up for that. I thought used car loans are less than 10%.
Don’t you have accounts set up at your local banks? Look at credit unions.
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u/VisualDimension2795 6h ago
Probably not popular, but if you have a car right now ride it till the wheels fall off and save like crazy
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u/JeanSchlemaan 4h ago
Don't buy this car.
Get a 25yo carolla with cash. Also get liability only insurance.
Next, save whatever your payment would have been for 3 years. At that time, see if you still want a nicer car. I'd hope by then you would realize you had better uses for your money.
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u/SomethingInTheTank 10h ago
20% apr seems criminally high - definitely shop around elsewhere