Dear Terry,
I am 19 years old with a credit score of 694. I have one credit card with a $1,000 limit. I have paid the balance in full every month during the seven months I’ve had the card. This is the only credit or debt I have.
I gross about $1,400 a month at my job, which I have been at for two years as of next month. I also just got a raise. I attend college full time and work 34 hours a week.
I am looking into purchasing a new car. I currently own a 2000 Honda Civic with about 135,000 miles and an estimated trade-in value of $4,000. My parents will not co-sign on a loan for me. The loan amount I will need will be $13,000.
Do you believe I will be accepted without a co-signer?
— Levi Farmer
Dear Levi,
It’s great that you have started responsibly on building credit, but your age may work against you in getting a loan without a co-signer. The lender wants to make sure there’s someone it can turn to if you get into a situation where you can’t make the loan.
As a rule, I recommend against loans with co-signers because a lot of them go bad and the co-signer is left holding the bag.
I would also suggest that you hold off on buying a new car until you graduate college and get a full-time job. Car payments, plus increased cost of insurance, can eat into that $1,400 per month income rather quickly.
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