Teens need to establish credit for car loans

Sep 3 2010

The high cost of new cars along with its associated incidental expenses has put them beyond the reach of the common man and beyond teenagers in particular. The only option is to look for used cars and even here, without adequate Car Finance it is not possible to own the car of your choice.
However, lenders are not particularly enthusiastic about lending to teenagers. The bad experience they have had lending to people with stable jobs and credit rating is still something they have not got over as yet and they are therefore very chary about lending to teenagers unless the teen in question can provide a credit history that is impressive. This can be in the form of a credit card or a video store card. If the record on these cards indicates that the payment has been done over the last six months on time, then they know that the credit score would be a favourable one.
The other alternative for teens is to have one of the parents co-sign the loan excepting that in case the teen defaults, the parent would have to repay the loan and not many would be willing to take on this responsibility.

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