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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?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“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, includingcollision coverageandcomprehensive 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.”
View full answer
- Gregory R.
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