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A student's guide to car buying Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with financial calculators and interactive tools as well as publishing original and impartial content. This allows you to conduct your own research and compare information for free and help you make informed financial decisions. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The deals that are advertised on this site come from companies who pay us. This compensation can affect the way and where products appear on this website, for example for instance, the sequence in which they be listed within the categories of listing, except where prohibited by law for our mortgage, home equity and other home loan products. But this compensation does have no impact on the information we publish, or the reviews appear on this website. We do not cover the entire universe of businesses or financial deals that could be available to you.



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7 min read Published August 31, 2022
The book was written by Dan Miller Written by Points and Miles Expert Contributor

Dan Miller is a former contributing writer for Bankrate. Dan wrote about loans, home equity and debt management in his writing.







Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances through providing concise, well-studied and well-researched content that breaks down otherwise complex subjects into bite-sized pieces.









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If you're a student looking to buy a vehicle and you've found it to be a little more difficult than you anticipated. Although the possibility of car loans for students are available but many lenders are wary of offering loans to first-time buyers or those with a weak credit history. Still it is true that students' car loans are possible -- especially when you have a steady source of income and good grades or can get the trust of a family or friend member to co-sign for you. What can you do to purchase a car while a student if you're a student or someone else with poor credit score there are ways to finance the purchase of a car. While you may not have as many options as someone with an established job and credit history however, it's possible. The process of finding an auto loan for a student is similar to the procedure for a postgraduate seeking to finance. But if you're with a smaller budget for your student is what matters. This is especially relevant since the average monthly expenses are at record levels, with used cars at $515 and new cars even higher at $677 by 2nd quarter 2022, according to . Follow these steps when you begin the car buying process. Figure out a realistic budget. Make use of a car payment to determine the amount you are able to spend each month. If you're budgeting, make mindful of the of the vehicle and not just the price on the sticker. Consider saving for a downpayment. While saving for a could be difficult for students, it could result in lower rates and monthly installments. If you're willing to save, the ideal option is 20 percent of the purchase price. Even if you are unable to afford that amount, aim for a minimum down amount. Find the best car for you. It's crucial to think realistically about the ideal car for your needs as a young man. Although it might seem appealing to purchase a brand-new car with all the latest technology, think about the location you'll park it, the number of potential passengers you'll have and the cost of gas for an option that is more luxurious. Lock in financing. It is smart to apply for loan prior to going car shopping whether in person or online -- to ensure you know what you can manage and to avoid dealer markups. In the case of a lender, prequalification will mean an easy credit pull. You should also be prepared to provide the necessary documents to confirm the details you have provided. Negotiate. Negotiating can be quite daunting, especially for young people. When it comes to car purchasing as a student it is advisable to take an adult friend or someone from your family with you. This way you feel more confident to push to get the deal you want. No matter what, stay assured and don't hesitate to walk away. How to improve your chances of loan approval As with any loan, the most affordable rates, terms, and acceptance are available to those with strong credit. As a student with a small amount of credit history, approval can be a challenge. There are a variety of methods to increase your chances of approval for a car purchase as a student. Provide a steady source of income The best method to qualify for a car loan as a student is to show a reliable earnings source. Before granting you the car loan lenders want to see that you have a reliable means of paying for the loan's monthly installment. If you're employed with a track record of at minimum a couple of months of income, you will increase your odds of being accepted. Contact banks and credit unions where you already have accounts . If your income isn't reliable source of income, or your income is seasonal or erratic it could be a problem getting a auto loan from most lenders. If you have an account at local banks or credit unions , you might reach out to it. It may offer students automobile loans as well as other financial programs targeted towards people who are in the same situation. You may be able to talk directly with a loan manager or an officer who has approval power. The main advantage is that it could be easier to plead your argument and convince someone in person. Get a co-signer Another option is to get a trusted friend or family member to sign your car loan. If you've got a co-signer, the lender will also examine the credit history of the co-signer and income. The advantage of this is that your loan is much more likely to be approved. However, one drawback is that your co-signer is also legally responsible for the vehicle loan. If you're not able to make the payments, that can cause friction in your relationship. Have good grades. Similar to lenders that consider credit background, some lenders consider the GPA as a measure of loan approval. If you carry a strong GPA, consider sharing that with prospective lenders. Because while not all will consider it, in certain cases, good grades could provide better rates. Where to shop for cars as a student Much has changed about the way people purchase and sell cars throughout the years, but one part remains the samewhen you have the time to shop around and shop around, you'll save money. The less time you have to look at all the options, the more money you'll pay for the car you want to purchase. Family and friends Finding a purchase from a family member is likely going to be the ideal situation. If you purchase a car from someone you trust limits the possibility that you'll buy a lemon. Additionally, depending on who you're purchasing it from, they may be willing to cut you an offer on the cost. This could be an best scenario, if no one knows anyone who is looking to sell their car, you will be out of the market. Local car dealers While many experiences are now online, there's still some value in shopping around at local dealerships for cars. Almost all dealers will have their inventory online as well, so you can see the cars available before you head to the showroom to take a test drive. While making use of the internet to aid you in your car search is a good idea, many people enjoy taking a look at and experiencing the car in person. Online In addition to looking at the online sites of local used and new car dealers, there are a variety of other . If you are interested in purchasing online, you are able to purchase with confidence using online used car marketplaces, like or . Facebook Marketplace, Craigslist and eBay are among the sites on which you can find people selling their cars privately, but be on the watch for . Other expenses to be aware of Remember that it's not only the cost of your car loan which will impact your budget. You must ensure that you have space for these other car-related expenses as well. Taxes on sales and registration. The taxes and fees are different depending on the local and state jurisdictions Check and find out how much they will cost you. Expected costs: Between $400 and $700 depending on your state according to . Insurance. The majority of states require that you have at minimum liability insurance. You can consult a number of different agents and brokers to find the coverage that is most suitable for your needs. Expected price: $1,771 based upon your state of residence, the driving record and type of vehicle, according to . Parking. Especially if you're a college student, you might need to pay for parking near or on campus. Costs expected to be $362 for the year or $181 per semester as per data from several universities. Fuel. With gas prices rising, the cost of fuel can have a significant impact on your budget. Estimated cost: $3.84 per gallon by the end of August 2022, according to . Repairs and Maintenance. In contrast to other types of insurance, insurance for cars typically does not cover routine maintenance, like oil changes. It is important to ensure that your budget has enough money to cover the above items. Expected cost: $9,666 when buying new vehicles, according to . How to drive without purchasing If you are having trouble getting a student car loan or have thought that it's not the best option for you There are alternatives. Leasing When you lease, you are given a vehicle to use for a predetermined time period and a specific number of miles. After the period of the lease in the event that there's no damage on the vehicle and you're not exceeding your mileage limit and you're not in violation of the lease, you can hand the vehicle back to the leasing company and walk away. Because you don't own the car and only hold it for a set periodof time, the monthly installment for leases is typically less than that of a car loan. If you'd like to take it off close the lease instead then you could, opt to do so if it's included in the lease agreement. Renting a car if you only require a car occasionally, it is worth renting a car when you need one. Although renting a car can be costlier on a daily basis than a car payment however, if you only require a car a few times a year, it could be more affordable. When you're renting a car and you don't have to be concerned about maintenance costs or tax or charges. Car sharing is another option. subscribing to the car sharing service. Turo is a peer to peer car rental service where you can rent cars directly from individuals. It's similar in cost and convenience to renting a car through an organization. If you live in an area where they're supported, you can also join the car sharing services like Car2Go or Zipcar. These services usually require a monthly or annual membership and permit users to rent cars at cheaper rates by the hour or per day. The bottom line: While it can seem challenging to secure car loans for college students, it is possible. Do your homework to find an affordable car, and think about the possibility of a co-signer if feasible. You should also speak with various lenders to compare rates to find the most affordable deal. Consider all of the extra expenses that go with owning a car and decide if you can make do with alternatives such as leasing, ride-sharing or public transportation. Find out more


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The article was written by an expert contributor to Points and Miles.

Dan Miller is a former contributor to Bankrate. Dan covered loans as well as home equity and debt management in his work.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers to manage their finances by providing concise, well-studied and well-researched content that breaks down complicated topics into digestible chunks.






Auto loans editor




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