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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 decisions by offering you interactive tools and financial calculators that provide objective and original content, by enabling you to conduct research and compare data for free - so that you can 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 Money The deals that are advertised on this website are provided by companies that pay us. This compensation can affect the way and when products are featured on this site, including for instance, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage home equity, mortgage and other home loan products. This compensation, however, does have no impact on the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial offers that may be available to you.



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7 minutes read. Published August 31 2022
Authored by Dan Miller Written by Points and Miles Expert Contributor

Dan Miller is a former contributor writer for Bankrate. Dan covered loans, home equity and debt management in his writing.







The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to take control of their finances with precise, well-studied information that breaks down otherwise complex subjects into bite-sized pieces.









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If you're a student looking to buy a car and you've found it a bit more challenging than you thought. Although automobile loans for students do exist, many lenders are wary of offering loans to first-time buyers or those with a weak credit history. Still, students can get student car loans are feasible and are especially appealing when you have a steady source of income, excellent grades , or the trust of a family or friend member to sign on your behalf. What can you do to purchase an automobile for a college student if you're a student or someone else with limited credit history there are ways to finance the purchase of a car. While you may not have the same options as someone with an extensive job history and credit history but it's still possible. The process of finding a car loan as a student appears similar to the procedure for a postgraduate looking to finance. But as you may be on a tighter student budget this is a factor to consider. This is particularly relevant since the average monthly expenses are at record levels, with used cars at $515, and new cars more expensive at $677 in the second quarter of 2022 according to . Take these steps before you begin the car buying process. Figure out a realistic budget. Use car payments to determine how much you can afford to spend each month. When you are budgeting be sure to focus on the of the vehicle and not just the price on the sticker. Consider saving for a downpayment. While saving for a down payment may be a challenge as an undergraduate, it could mean lower rates and monthly payment. If you're willing to save, the ideal situation is saving at least 20 percent of the price. Even if you are unable to spend that amount, you should aim for at least a small down payment. Choose the right car for you. It's crucial to think realistically about the best car to meet your needs as a young man. Although it might seem appealing to purchase a brand-new car that has the most modern features, take into consideration where you'll be parking it, the amount of potential passengers you'll have and the cost of gas to get the more expensive option. Secure financing. It is smart to apply for a loan prior to shopping for a car -- online or in personto make sure you know the amount you are able to afford and skip out on markups at the dealership. Based on the lender the prequalification process will be the pulling of a credit card. Be prepared to provide the necessary documents to confirm the information you supply. Negotiate. Negotiating can be quite intimidating, especially for a young person. If you are purchasing as a student it is recommended to bring an adult who is trustworthy or a an adult from the family. So you can will be more confident about pushing for the price you're entitled to. No matter what, remain assured and don't hesitate to walk away. How can you increase your chances of loan approval. As with any loan that you apply for, the best competitive rates, terms and approval are offered to those with strong credit. As a student with only a little credit history, getting approval could be difficult. There are a variety of methods to increase the chances of getting approval for a car purchase as student. Provide a steady source of income. The best way to get a car loan as a student to prove a reliable sources of revenue. Before giving you an auto loan the lender will want to see that you have a stable way of making the loan's monthly payment. If you have a job and have a record of at minimum a couple of months of income, you will increase your odds of being accepted. Speak to banks or credit unions where you already have accounts . If there isn't a steady source of earnings, or if your income fluctuates or is not consistent it could be a problem getting a auto loan from the majority of lenders. If you have an account at a local bank or it is a credit union, you could contact it. It may offer student automobile loans or other programs targeted towards people in your situation. You may be able to talk directly with an loan manager or officer with approval power. The main benefit is that it may be more straightforward to present your case and convince that person in person. Find a co-signer A different option is to find someone you trust like a family member to for your vehicle loan. If you have a co-signer then the lender will also take a look at the credit history of your co-signer as well as income. The advantage of this is that your loan is much higher likelihood of being approved. However, one drawback is that the cosigner is legally accountable for the vehicle loan. If you're not able to pay your loan on time, it can cause friction between you. Get good grades Similar to lenders that consider credit background, some lenders consider their GPA as a measure of loan approval. If you have a good GPA, consider sharing that with prospective lenders. Because while not all will consider it, in certain circumstances, good grades may result in more competitive rates. What are the best places to look for cars while an undergraduate A lot has changed regarding the method that people buy and sell cars throughout the years, but one thing remains the same- if you're able to shop around, you can often save money. The less time you have to explore all your options, the more money you'll have to shell out for your car. Friends and family Finding a purchase from a family member is likely to be the ideal situation. Buying a car from someone you trust will reduce the chance that you buy an unsatisfactory product. Plus, depending on who you're purchasing it from, they may offer an offer on the cost. This could be an ideal scenario, if there's no one that you know is looking to sell their vehicle and you're not able to sell it, you're out of the market. Local car dealers While many instances have gone online, there is still a merit in visiting local dealerships for cars. Almost all dealers will have their inventory online as well which means you can check out what cars are available before you head to the dealership to take a test drive. While using the internet to help you with your search for a car makes a lot of sense, many people enjoy visiting the vehicle in person. On the internet, in addition to looking at the online sites of local new and used car dealers, there's many other . When it comes to online buying, you can purchase with confidence using marketplaces for used cars online such as . Facebook Marketplace, Craigslist and eBay are all sites where you can look for people privately selling cars however, be on the watch for . Other costs to keep in mind Remember that it's not just the price of your car loan that will affect your budget. You must ensure that you have space for these other car-related expenses as well. Taxes on sales and registration. These taxes and fees vary according to the state and local authority, so check and see the amount they'll cost you. Expected price: between $400 and $700 depending on the state you live in according to . Insurance. A majority of states require you to be covered at least with liability insurance. Take a look at a couple of different agents and brokers to determine the type of coverage which best meets your needs. Expected cost: Average of $1,771 based upon your home state, the driving record and type of vehicle, according to . Parking. Particularly if you're a college student, you may be required to pay for parking on or near campus. Costs expected to be $362 for the year or $181 per semester, according to data compiled from various universities. Fuel. As gas prices rise as well as the cost of fuel could significantly impact your budget. Expected cost: Average $3.84 per gallon at the end of August 2022, according to . Repairs and maintenance. In contrast to other types of insurance, insurance for cars doesn't usually provide routine maintenance services, such as oil changes. You'll want to make sure your budget allows money for the above items. Expected cost: Average of $9,666 when buying new vehicles, according to . How to drive a car without buying If you're having difficulty qualifying for a student car loan or have concluded that it's not best option for you You have other options. Leasing When you lease, you are given a vehicle to use for a specific duration and amount of miles. When the lease is over, lease term in the event that there's no damage on the vehicle or your mileage limit, you can give the vehicle over to leasing firm and walk out. Since you don't actually own the car , and only own it for a specific period, the monthly payment for a lease will typically be lower than a loan. If you'd like to take it off at the end of the lease instead then you could, choose to, if you are allowed included in the lease agreement. Renting a car if you just require a car sporadically, you can consider hiring a car whenever you need one. While renting a vehicle is higher on a daily basis than a car loan, if you only need the car for a few times throughout the year, it may be more affordable. If you're renting a vehicle it is also not necessary to worry about maintenance or taxes or fees. Car sharing is another option. signing up to a car sharing service. Turo is a peer-to-peer car rental service, where you can hire cars directly from people. It will be similar in price and convenience to renting a car through an organization. If you're located in an area that is available, you could join a car sharing service like Car2Go and Zipcar. They typically require an annual or monthly membership and allow you to rent cars for less per hour or per day. The bottom line: While it might seem difficult to obtain car loans for college students but it's possible. Take your time to locate the best car for you and consider the possibility of a co-signer if feasible. You should also speak with a variety of lenders to compare rates and get the most affordable deal. Consider all of the extra expenses that go when you own a car, and consider if you are able to save money by using alternatives such as leasing, ride-sharing or public transportation. Learn more


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Written by Points and Miles Expert Contributor

Dan Miller is a former contributing writer for 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 since late 2021. They are passionate about helping readers feel confident to control their finances by providing concise, well-studied and well-researched content that breaks down otherwise complex topics into digestible chunks.






Auto loans editor




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