Hello

I am 18 year student with a part time job my monthly earning is average 1800$. I want to finance Honda civic 2 door coupe 2006 ranging from 16k to 18k. I Currently have a credit card which is 2 months old and has a limit of 1000$. I paid all the due fees on time. I currently have a co- applicant which is my dad he has an excellent credit score.

How many chances I have to get approved for the vechile.?


Any advice would be appreciated

With a co-applicant who has an excellent credit score, you should have no problem getting a pretty low interest rate.

The only concern would be whether you can actually afford the monthly payment. Even at a good rate, you are still looking at a $300-$400/month car payment over 60 months. Just make sure you can make the payment, with everything else in your budget, comfortably. Otherwise, you'll begin using that credit card more and more and eventually get into a bad situation.

That's a great car to have. My best friend bought a Civic in 1999 and they have over 220k miles on it, and it still runs wonderfully. Even though they have newer vehicles now, they still use it on and off.

Thankyou verymuch for the reply I realy appricated that. so thats mean I should have no problem for getting approved for the loan or just to get better rate.

Make sure you always have a job, I don't know if you're planning on going to college, but the first thing I had to do when I got to college was sell my car, and I was only paying for insurance.

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Never sign intellectual property agreements...

Just to play devil's advocate - why on earth do you need a car that costs that much when you are 18?

I understand wanting a car that is nice when you are that age - and reliability is a great topic in relation to finance - but I bet you could shave 25-50% off the price of a car and still get something very reliable - or even fun. Heck, you can get a very nice condition late 80's Porsche 944 Turbo for under $10K now (and those things are VERY VERY fun - I used to have one).

Bill has some good advice here. Lets look at some numbers.

Suppose that you are prepared to get an auto loan @7% interest.
$18,000 @7% x 60 months = $356.42/month or $21,385.00
That's $3,385 in interest charges.

Suppose on the other hand, you save like a madman and paid cash for whatever car is ~HOT~ but costs half the price. You could do it in 5 months if you are still at home and the folks are covering your expenses.
$1800 x 5months @5% compounding monthly = $9075.00

Big deal, 75 bucks interest right?

YUP, IT IS.

The difference in [interest saved + interest earned], is a whopping 12%, and that's without any fancy investing going on. There are several on-line banks paying around 5% on savings accounts.

According to the rule of 72, at 12% your money will double every 6 years. So lets look at what happens in just 5 years (60 months) if you are willing to pay cash for this first car.

The $356.42/month payment is now invested in a 5% savings account and will grow to $24,238.73 in 60 months. (Remember you are driving a paid off car.)

You would have spent $21,385.00 on your auto loan instead of $9000 cash.
When we add the cost of the car with interest or $21,385 to the cost of lost savings and interest or $24,238,we get a total cost of $45,623 for your new car. To be fair, I'll subtract the $9000 paid for the less expensive car which leaves you with $36,623. Is that Honda really worth so much?

But here's where it gets really interesting.

Suppose you now had that $24,000 sitting in the bank 5 years from now. It got there from your $356/month payments, remember? You paid yourself instead of the bank and allowed yourself to prosper from the interest. Your car was paid off when you bought it and maybe you are now ready for a newer car. You pull $4000 from your account for a down payment. The $20,000 remaining balance you have decided is your retirement fund.

In 5 years you will be the ripe old age of 23. You have 44 years for your money to work for you before you hit age 67 (full retirement age).

$20,000 compounding at 9% for 44 years =$1,033,758.00
$20,000 compounding at 10% for 44 years =$1,599,586.00
$20,000 compounding at 12% for 44 years =$3,825,739.00

This is without you ever adding another dime to your investment!

In other words, if you sacrifice NOW for 5 months, swallow your pride and buy a nice, but less expensive car, you will be able to have a very secure future in your life!

It really is that simple. The S&P 500 has averaged around 12% during the past 85 years. If you put those dollars into a ROTH IRA each year as they accumulate, your $20K will never be taxed again, and neither will the interest it gains!

That's millions of dollars, tax exempt for retirement.

Can you handle it?

Is it worth scrimping for a few months in your life?

Now we understand how youth is wasted on the young. When we have all the cards in our hands, we have not yet learned the rules of the game.

Trust me when I say you dont need a nice car, or credit card dept. I made that mistake early in life and I am paying for it still.

It is always better to delay to buy luxuries earlier than ever, that too on a credit-based, not a good idea to seek advice.

Look, I'm all for the "needs" based lifestyle. But it isn't reality.

Reality is that people are going to buy what they want to buy. Period.

"wants" become "needs" very fast when you really want something. This is the trouble today, from a psychological perspective. Peer pressure, mass media bombarding us with marketing messages all day long. It's inevitable.

If I tried to tell my clients what to do with their money, they wouldn't be clients. The value I see in this board is ideas on how to make "wants" and "dreams" happen, even if we've made some mistakes along the way.

Heck, I bought a brand new car at 18, and it cost me a bundle. But I made some fabulous memories in that car, and I wouldn't trade those for all the money in the world.

Seek balance.

Still, Dru's numbers are very convincing. Part of me is ready to go sell my wife's car for something cheaper, (she would probably divorce me though).

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Never sign intellectual property agreements...