Car Loans for Students
One of the issues a college student faces when attempting to obtain a car loan (especially without a cosigner) is the fact that they probably have little or no credit history. The length of a loan applicant’s history is one of the main factors contributing to a credit score. How can the lender evaluate how diligent you are at paying back a loan if you have not paid one back yet?
However, car loans have become more accessible for college students to the point where they are readily available. Following are a few things to consider when trying to secure a car loan if you are a student.
Type of Vehicle
Decide whether you want to purchase a new or used vehicle. For example, when you drive a new car off the lot, it instantly decreases about 20% in value. However, a loan on a new car usually comes with lower interest rates.
A used car may not only come with a higher interest rate, but you may need more of a down payment to obtain a loan.
Another factor to consider is the total cost of operating the vehicle. For example, if you want an SUV, not only will you be paying more for it, the fuel and insurance will be more expensive. Plus, it may be more costly to repair than a regular sized car.
Discounts
There are a few discounts you want to be on the lookout for. Some may be available because you are a student and some are part of a regular package of offers from the car dealer:
- Rebates or cash-back bonuses from the dealer
- Complimentary roadside assistance
- Zero percent financing or low interest rates
- Deferred payments
- Low down payment or flexible down payments
- Good student insurance
Private Sale
If you can secure a good deal from a private owner, you might be able to secure good financing from a bank or online lender. Get pre-approval for the amount first. Make sure you have the vehicle’s history checked out. Then negotiate the final cost with the seller. After that, have the lender send you the check for that exact amount of the car.
