Auto Loans for Student Car Buyers: Doing Your Homework

For many college students, especially those attending universities outside of major metro areas, a car or truck is a necessity for commuting to classes, part-time jobs, internships, or back and forth between school and family.  Some students receive a car as a graduation present from high school, or had a car since the time they could drive.  But many students are not quite so fortunate, and the economy has hit many families in a big way, thrusting more students out into the financial ”cold” at an earlier age.

Unfortunately, college days are not necessarily the most optimal time to finance a car (to say the least).  Why not?  Well, most college students have:

  1. Low Income
  2. Minimal Credit (if not non-existent)
  3. Existing Student Loan Debt
  4. No Money for a Down Payment

These 3 issues are especially relevant to getting auto loans for students, because these factors are exactly the ones that lenders examine and evaluate.  Basically, the normal college student is not a very good credit candidate in the eyes of most banks, credit unions, automaker finance departments, and in-house financing lots.

To weigh the odds better in your favor, you need to be able to:

  1. Prove a Steady Income
  2. Provide a Cosigner with Excellent Credit
  3. Put 10-20% Down Upfront

Doing your homework in these 3 areas will vastly increase the ease with which you find a lender willing to extend you a student auto loan.  Additionally, like people seeking military auto loans, students have a number of exclusive resources at their fingertips.  For one, you should check out any number of the special student discounts available from select manufacturers.  GM, for one, has a discount program for current students and recent graduates, as do many other manufacturers.  Additionally, your college or university may provide financial counselors who can help you decide whether a student auto loan is right for you; and if so, what your budget should be.

The cost of college is as high as ever, and tuition costs are rising at a rate that far outpaces the inflation rate.  With student loans to pay off, books to buy, room and board to cover, and all of the other expenses that getting a college education requires, the last thing you want to do is get over your head or ”upside down” on student auto loans.

Related Loan News

Both comments and pings are currently closed.

Comments are closed.