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?
“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
Should I cancel my auto insurance since I am not driving anywhere due to COVID-19?
Since the pandemic started, I have been working from home. I just found out that I will not be back in the office until spring of 2022. To save money, can I just cancel my auto insurance? Will there be any negative repercussions if I do?
Apr 29, 2021
Do I need personal injury protection insurance if I have great health insurance from my job?
I was thinking of getting personal injury protection on my car insurance policy, but I already have great health insurance from work. Is there a benefit to getting personal injury protection?
Apr 28, 2021