Can I get a $10,000 car loan as a 20-year-old with $1,500 in monthly income and no credit?

I want to get a used car for $10,000, but I'll need financing. I have a cosigner who makes $1,500 a month (not sure about their credit), and I make $1,500 a month. I have no credit. Can I get a car loan?

Answer
“Monthly income is only one part of the equation for loan approval. Since you have no credit, your chances of getting approved are minimal.
If your cosigner has great credit, that might be enough to get you approved. But before you sign on the dotted line, take this into account:
  • If you get a 60-month loan, which is probably the maximum allowed for a used car loan, you’ll pay roughly $200 a month, so budget for that.
  • As long as you have the vehicle financed, you’ll likely have to pay for full-coverage car insurance, including collision coverage and comprehensive coverage. At your age, you’re probably looking at a premium of $500 a month.
Adding up those two amounts, this car will cost you almost half of your pre-tax income. So you have to ask yourself, do you have to pay rent, groceries, utilities, or other bills? If so, financing a car probably isn’t a smart financial move.
Take public transit or a bicycle until you can save up money to pay cash for the car.”
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Eric Schad
Answered on Apr 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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