I am 18 and I want to apply for a loan for a used car. I do not plan on paying more than $4000 for the car but the bank has a minimum of $7500 for car loans. If I only used $4000 could I just use the rest to pay it off? I also do not have any credit.

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    You should shop for a car loan at another bank or credit union. – Jasper Dec 9 '15 at 0:47
  • You could also consider saving up a large down payment (like perhaps even 50%) and then see what kind of interest rate a peer-to-peer online lender (like Lending Club) is willing to offer you. Having never used LC, I don't know how they determine credit-worthiness but I believe it takes into account more factors. – Jay Dec 9 '15 at 4:39
  • You can get a very nice 15 - 20 year old car for your budget. In addition to a $ 120 - 160 / month payment for 36 months, plus at least $ 100 / month for maintenance, you should also budget for liability insurance, uninsured motorist insurance, towing insurance (or AAA), and comprehensive and collision insurance. You can easily find a nice car that gets 16 mpg in the city, and 26 mpg on the highway, and budget for fuel accordingly. Basic insurance might be $ 80/month in a rural town, up to $ 400/month for good insurance in a typical big city. Total: $ 350 - $ 800/month for 5-10k miles/yr. – Jasper Dec 9 '15 at 6:06
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    @TobiaTesan: questioner has to go to another bank (or other source of credit) because this bank doesn't offer the product she needs (a $4000 car loan). Similarly, "I want a can of Coke and this store only sells big bottles" -- "go to another store". I think that's all there is to it, nothing subtle. – Steve Jessop Dec 9 '15 at 13:53
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    @Jasper Wait - are you recommending he buy a 15 - 20 year old car? Unless he's seriously into cars and wants to do the maintenance himself, buying a car that old is going to be a receipe for expensive bills and distaster – Dan Dec 9 '15 at 14:03

I doubt they will let you even get an auto loan for almost double what the car is worth. A car loan is secured by the car. If it isn't worth what you borrowed they wouldn't be able to recover their money by repossessing the car if you didn't make your payments.


You should shop for a car loan at another bank or credit union. There are lots of lenders willing to lend just the amount you need. According to Craigslist, you can buy a very nice 15-20 year old vehicle for the amount you have budgeted.

Perhaps you can borrow against a credit card or other personal line of credit. That might even be cheaper. If so, it will be much more convenient -- you won't have any hassles getting a car lender's name added to, or removed from, the title. It would also eliminate the possibility of repossession.

Have you set up a checking account and a savings account? If so, ask your bank or credit union about a car loan or credit card or personal line of credit. If not, shop for all of them at the same time.

If you can get a $ 4,000 car loan at 7 % APR for 36 months, your monthly payment would be about $ 125 per month. There is a major U.S. on-line bank that (as of December 2015) offers these terms for some U.S. buyers with "rebuilding" credit (on approved credit). The bank has a risk-free on-line pre-qualification process. They don't actually make the loan until after you submit your loan application at the dealer.

An Oregon credit union that posted its rate sheet in October 2015 was offering (on approved credit) a $ 4,000 unsecured loan at 17% APR for up to 48 months to members with credit ratings of "559 or below". This works out to 36 monthly payments of about $ 145/month, or 48 monthly payments of about $ 120/month. (They also offered auto loans at 15.5% APR with a substantial downpayment.)

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    "you can borrow against a credit card" - are you suggesting OP use a credit card for borrowing money and pay credit card interest rates? If so, I would not recommend this unless it was one of those 0% APR for first year credit cards. I'm not too familiar with US auto loan interest rates but 15.5% or 17% APR sounds frightfully high. – Jay Dec 9 '15 at 4:33
  • @Jay -- Yes. I never rely on teaser rates, and the original poster might not be able to get a teaser rate deal. Other than interest rates, credit cards have much better loan terms than most auto loans. In the original poster's situation (needs a reliable car to get to her job, has not had time to accumulate savings, has no credit history, is willing to buy an inexpensive car, and can afford to pay it off in two - four years) borrowing makes sense. With no credit history, she will likely have "frightful" interest rates no matter what option she chooses. – Jasper Dec 9 '15 at 4:42
  • In the original poster's situation, a credit card might well have a competitive interest rate.The financial benefit of being able to get to work offsets the interest on a modest loan, even at these "frightful" interest rates. – Jasper Dec 9 '15 at 4:46
  • OP hasn't mentioned anything about needing a car to get to a job or anything of the sort. I also suggested, in a comment, looking at peer-to-peer lending platforms which could potentially offer better terms than credit cards. – Jay Dec 9 '15 at 4:49
  • I'd be mildly surprised if an 18yo could get a CC with a $4k limit. It wasn't until a year or two after I got my degree and started at a related job that any were willing to offer me a limit that high. – Dan Neely Dec 9 '15 at 14:46

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