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?
Apr 28, 2021
Answer provided by
Answered at Apr 28, 2021
“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.”
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Browse by topics
What others are asking
Do I need to keep my American car insurance to drive during return trips to the U.S.?
I'll be moving to Japan soon. But on return trips to the U.S. to visit family, I'll need to borrow my parents' car occasionally. Do I need to keep my current auto insurance policy so I can use my parents' car?
Feb 22, 2021
In what order should I handle license, registration, and car insurance after an out-of-state move?
I moved from Oregon to Idaho and I don’t know what order to follow when changing my insurance, driver's license, and registration. How do I do it?
Apr 26, 2021
Should I get a non owners insurance policy if I'm moving to New York and don't need a car?
I'm moving to New York City, but only for two to three years. I know that a lapse in insurance can qualify you as "high-risk." My agent told me I can forego the lapse by purchasing a non owners insurance policy, but it seems too expensive ($90 a month). Should I get this coverage?
May 04, 2021