The first car is always a very special purchase, which is a milestone in the life of a young person, but also a financial burden that must be taken seriously. Hardly anyone is able to finance a car out of their own pocket right after finishing school, which is why you either need the financial help of your parents or relatives.
Always consider the option of a loan
If this possibility does not exist, for whatever reason, you have to consider the option of a loan. However, the car or loan should never exceed your own financial means. Those affected have to expect that further investments will be due after school, which, in the worst case, could lead to an overindebtedness at a young age.
Moving due to training or tuition are just a few of the costs that have to be calculated directly after school. In addition, young adults often still have a very low income, which rarely reaches much higher spheres as a young professional. Finding a loan for the first car is also associated with keeping the cost of the loan as low as possible and at the same time finding a lender who will issue a loan to the buyer of the car.
Creditworthiness could be a problem
If the first car is purchased at a young age, i.e. from 18 to 24, the credit line available at banks is usually still relatively small. Not only do people of this age hardly have any attachable or valuable assets, the income is generally relatively low. Often, only individual part-time jobs are pursued alongside the studies, which are used to finance the household and the running costs of a car.
An additional financial burden due to an installment loan that runs for several months or years must therefore be considered carefully, also because the loan for the first car is often in the four-digit range, even for used cars. If banks have a chance of getting a loan due to the low income, then usually only in the amount of a small loan. The loan for the first car is advantageous at least because attachable capital also arises from the car purchase.
If the worst comes to the worst, i.e. if the borrower does not make payments, the bank can still seize the car to settle the borrower’s liabilities to the bank. It is therefore not unlikely that a small loan for a car will definitely be approved. In an emergency, borrowers can also try to persuade family members to provide a guarantee.