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A student's guide to car buying Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators that provide objective and original content. This allows you to conduct your own research and compare data for free to help you make sound financial decisions. Bankrate has agreements with issuers such as, but not limited 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 that pay us. This compensation could affect how and where products appear on the site, such as, for example, the order in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage or home equity products, as well as other home loan products. However, this compensation will affect the information we publish, or the reviews you see on this site. We do not cover the entire universe of businesses or financial offers that may be available to you.



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Klaus Vedfelt/Getty Images
7 min read Published August 31 2022
Authored by Dan Miller Written by Points and Miles Expert Contributor

Dan Miller is a former contributing writer for Bankrate. Dan wrote about loans as well as 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 confidence to control their finances through providing precise, well-studied information that break down complex subjects into bite-sized pieces.









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If you're a student looking to purchase a car, you may have found it a bit more challenging than you thought. While car loans for students do exist, many lenders are wary of offering loans to first-time buyers, or those with less credit histories. However, student car loans are possible -- especially if you have a reliable source of income and good scores or can find a trusted friend or family member to co-sign on your behalf. What can you do to purchase an automobile while a student when you're a student, or have a low credit score There are many options to finance the purchase of a car. While you may not have the same alternatives as someone who has an extensive job history and credit history however, it's possible. The process of obtaining an auto loan as a student appears exactly like what it would for a postgraduate driver seeking to finance. But as you may be on a tighter student budget is what matters. This is especially relevant since the average monthly expenses are at record levels and used cars costing $515 and brand new cars higher at $677 by the second quarter of 2022, according to . Follow these steps when you begin the car buying process. Figure out a realistic budget. Use the car loan to figure out how much you can afford to spend each month. When budgeting, be mindful of the of the vehicle and not just the cost of the vehicle. Make a savings plan for a down payment. Although saving for a down payment can be a challenge as an undergraduate, it could mean lower rates and more frequent installments. If you have time to save, the ideal option is 20% of the price. However, even if you cannot spend that amount, you should aim to make at minimum a modest down cost. Choose the right car for you. It is important to think realistically about the right car for your needs as a young person. While it could be tempting to buy a brand-new car that has the most modern technology, think about where you'll park it, how many potential passengers you'll have and the cost of gas for a more luxurious option. Secure the cost of financing. It's a good idea to apply for a loan prior to shopping for a car either in person or on the internetto be sure of what you can pay and avoid dealership markups. Based on the lender it is possible to get prequalified. This could mean a soft credit pull. You should also be prepared to share necessary documentation to confirm the details you have provided. Negotiate. can be very intimidating, especially for young people. In the case of car buying while a student, it is recommended to bring an adult friend or an adult from the family. This way you will be more confident about pushing for the deal you deserve. But no matter what, stay positive and don't hesitate to walk away. How to improve your chances of loan approval. Like any loan, the most affordable rates, terms, and acceptance are available to those with good credit. For a student who has a small amount of credit history, getting approval could be difficult. However, there are plenty of ways to boost your chances of approval when purchasing a car as student. Provide a steady source of income. The most effective method to qualify for a car loan as a student to show a reliable sources of revenue. Prior to granting you an auto loan the lender will require proof that you can demonstrate a solid means of paying for the loan's monthly installment. If you're employed and a history of at the very least a few months' income, you'll increase the likelihood of getting accepted. Talk with banks or credit unions with whom you already have accounts If you don't have a steady source of earnings, or if your income is seasonal or erratic and you're likely to have difficulty getting a car loan from a variety of lenders. If you have an account with local banks or credit unions perhaps a credit union, it might be possible to reach out to it. It could offer student auto loans or other programs geared towards those in your situation. It is possible to speak directly to a loan manager or officer with approval powers. The primary advantage is that it will be easier to plead your argument and convince that person in person. You can also get a co-signer. Another alternative is to ask someone you trust like a family member to for your vehicle loan. When you have a co-signer, it is likely that the lender will also look at the credit history of the co-signer and income. The benefit of this will be that the loan is better able to get approved. One drawback, however, is that your co-signer is also legally responsible for the car loan. If you're unable to make the payments, that could create friction in your relationship. Get good grades Similar to lenders factoring credit background, some lenders consider your GPA as a way to determine loan approval. If you have a good GPA be sure to share that with potential lenders. While not all lenders factor it, in some circumstances, good grades may result in more competitive rates. What are the best places to look for cars as a student Much has changed in the ways people purchase and sell vehicles through the years, however one aspect remains the sameIf you have the time to look around, you can often save money. The less time you've got to research all options, the more money you'll pay for your car. Family and friends Finding a vehicle from a family member is likely going to be the ideal situation. Buying a car from someone you trust will reduce the chances that you will purchase a lemon. In addition, depending on the person you are buying the car from, they might be willing to make a deal on the price. While this may be the best scenario, if no one has ever tried to sell their vehicle then you're out of luck. Local car dealers Although a lot of experiences have gone online, there's still some value in shopping around at local dealers in the car industry. Almost all dealers will have their inventory online , too, so you can see the cars available before heading to the dealership for a test drive. While making use of the internet to aid you find a car is a good idea it is also a popular method of visiting the car in person. Online In addition to browsing the online sites of local new and used car dealers, there's many other . When it comes to purchasing online, you are able to buy with security using online used car marketplaces such as . Facebook Marketplace, Craigslist and eBay are just a few sites where you can search for individuals selling their cars privately, but be on the lookout for . Other costs to consider Keep in mind that it's not just the costs of your vehicle loan which will impact your budget. You must ensure that you have space for these other car-related costs as well. Sales tax and registration fees. The fees and taxes vary according to the state and local authority, so check and see the amount they'll cost you. Expected cost: Between $400 to $700 based on the state you live in as per . 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 insurance that best suits your needs. Expected cost: $1,771 based upon your state of residence, the driving record and type of vehicle according to . Parking. Especially if you're a student at a college, you might be required to pay for parking near or on campus. Costs expected to be $362 annually or $181 per semester according to research conducted by numerous universities. Fuel. With gas prices rising, the cost of fuel can significantly impact your budget. Expected price: $3.84 per gallon by the close of August 2022 according to . Repairs and Maintenance. Like other types of insurance, insurance for cars typically does not include routine maintenance items, such as oil changes. It is important to ensure that your budget allows money for these things. Expected cost: $9,666 when buying new vehicles According to . How to drive without purchasing If you are having trouble qualifying for a student car loan, or if you've concluded that it's not most suitable option for you, there are other options. Leasing When you lease, you are given a vehicle to drive for a specified time period and a specific number of miles. After the term of the lease and as long as there's no damage to the vehicle or your mileage limit and you're not in violation of the lease, you can hand the vehicle back to the leasing company and drive off. Since you don't actually own the car , and only hold it for a certain time, the monthly cost for a lease will typically be less than that of a car loan. If you'd like to take it off close the lease instead it is possible opt to do so if it's in the original lease agreement. Renting a car If you only require a car sporadically, you can consider renting a car when you're in need of one. While renting a vehicle is costlier on a per-day basis than a car payment, if you only need the car for a few times per year, it could be more affordable. When you're renting a car it is also not necessary to fret about maintenance, taxes or fees. Car sharing is another option, as is joining an auto sharing service. Turo is a peer to peer car rental service that lets you rent cars directly from individuals. It's comparable in price and convenience as renting a car from the company. If you live in a region where they're accepted, you can sign up to the car sharing services like Car2Go and Zipcar. They typically require an annual or monthly membership and then allow users to rent cars at less per hour or per day. The bottom line: While it might seem difficult to secure car loans for college students It is not impossible. Do your homework to find the best car for you and consider getting a co-signer, if feasible. It is also advisable to speak with different lenders to compare rates to find the best deal. Consider all of the extra costs associated when you own a car, and consider if you are able to get by with alternatives like leasing, ride-sharing or public transport. 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 wrote about loans, home equity and debt management in his work.



Edited by 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 through providing precise, well-studied information that breaks down complicated topics into digestible chunks.






Auto loans editor




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