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A student's guide to car buying Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering you interactive tools and financial calculators as well as publishing original and impartial content. We also allow you to conduct your own research and compare data for free - so that you can make informed financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation could affect how and where products are displayed on the site, such as for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law. Our mortgage or home equity products, as well as other home loan products. However, this compensation will not influence the content we publish or the reviews appear on this website. We do not include the vast array of companies or financial offerings that could be accessible to you.



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7 min read published August 31 2022
Authored by Dan Miller Written by Points and Miles Expert Contributor

Dan Miller is a former contributor to 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 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 topics into manageable bites.









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If you're a student trying to purchase a car and you've found it more difficult than you expected. While automobile loans for students are available however, many lenders are cautious of providing loans to first-time buyers or those with limited credit histories. Still students can get students can get student car loans can be arranged particularly in the event that you have a stable source of income, good scores or can find the trust of a family or friend member to co-sign for you. How do you buy an automobile while a student even if you're in college or someone else with a low credit score, there are options to finance a car. Although you might not have the same options as someone with a long-established job and credit history however, it's feasible. The process of obtaining the right car loan as a student appears similar to the procedure for a postgraduate student who is looking to finance. However, if you're with a smaller budget for your student this is a factor to consider. This is particularly relevant since the average monthly expenses are record high, with used cars at $515, and new cars steeper at $677 in the 2nd quarter in 2022, according to . Follow these guidelines when you start your car buying process. Figure out a realistic budget. Use car payments to determine the amount you are able to spend each month. When budgeting, be certain to concentrate on the car's value and not just the price on the sticker. Consider saving for a downpayment. Although saving for a down payment can be difficult for a student, it can mean lower rates and more frequent installments. If you're willing to wait, the best-case option is at least 20% of the cost. However, even if you cannot afford that amount, aim for a minimum down amount. Decide what car is right 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 technology, think about where you'll be parking it, the amount of potential passengers you'll have and the cost of gas to get an option that is more luxurious. Make sure you secure the financing. It is smart to apply for loan ahead of car shopping whether in person or online -to be sure of what you can afford and skip out on dealership markups. Depending on the lender the prequalification process will be a soft credit pull. It is also important to submit the required documentation to verify the details you have provided. Negotiate. can be very daunting, especially for young people. In the case of car purchasing as a student it is advisable to take a trusted adult or an adult from the family. This will make you feel more confident to push to get the deal you want. No matter what, stay positive and don't be afraid to walk away. How can you increase your chances of loan approval As with any loan, the most competitive rates, terms and acceptance are given to those with good credit. As a student with a small amount of credit history, approval can be a problem. But there are a number of ways to improve the chances of getting approval for a car purchase as student. Provide a steady source of income. The best way to secure a car loan as a student to show a reliable sources of revenue. Before granting you the car loan lenders require proof that you have a reliable method of paying the monthly payments. If you're employed and have a record of at least a few months of income, you'll increase your chances of being approved. Talk with banks or credit unions with which you have accounts if you don't have a reliable sources of revenue, or your income is fluctuating or seasonal and you're likely to have difficulty getting a car loan from the majority of lenders. If you have an account with a local bank or it is a credit union, you could call it. It could offer students auto loans and other services targeted at people in your situation. It is possible to speak directly to an loan manager or an officer who has approval power. The major benefit is that it may be more straightforward to present your argument and convince that person in person. You can also get a co-signer. Another option is to get an individual who is a trusted family member to sign your vehicle loan. When you have a co-signer, it is likely that the lender will also look at your co-signer's credit history and income. The benefit of this can be the fact that your loan is more likely to be approved. The downside is that the co-signer is legally accountable for the car loan. If you're not able to pay the loan, it can cause friction in your relationship. Get good grades Similar to lenders that consider credit history, some lenders use the GPA as a metric for loan approval. If you have a good GPA be sure to share that with prospective lenders. Because while not all will consider it, in certain instances, good grades can mean 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 thing has remained the same -If you're willing to research and shop around, you'll save money. The shorter time you have to explore all your options, the more money you'll pay for your car. Friends and family Finding a vehicle from a family member is likely going to be the ideal situation. Buying a car by someone whom you know limits the chance that you buy an unsatisfactory product. Plus, depending on who you're buying it from, they may be willing to make some deals on the price. Although this could be the ideal situation, if nobody knows anyone who is looking to sell their car, you will be out of luck. Local car dealers Although a lot of experiences are now online, there's still some merit in visiting local dealerships for cars. Almost all dealers will have their inventory on the internet as well and you'll be able to see the cars available prior to heading to the dealership to test drive. While using the internet to help you in your car search is an excellent idea, many people enjoy visiting the vehicle in person. Online In addition to looking at the sites of local used and new car dealers, there are a variety of other . In the case of buying online, you can purchase with confidence using online used car marketplaces, like or . Facebook Marketplace, Craigslist and eBay are all sites where you can search for individuals selling their vehicles privately, but be on the watch for . Other costs to keep in mind Remember that it's not only the price of your car loan that can impact your budget. You must ensure that you have the space to cover these other auto-related expenses as well. Registration and sales tax. The fees and taxes vary according to the state and local authority So, make sure to check the amount they'll cost you. Expected price: between $400-$700 based on your state as per . Insurance. The majority of states require that you have at least liability insurance. Check around with a couple of different brokers and agents to find the coverage which best meets your needs. Expected cost: Average of $1,771 based upon the state you reside in, your driving history , and the type of vehicle as per . Parking. Particularly for college student, you might have to pay to park on or near campus. Costs expected to be $362 for the year or $181 for a semester according to research conducted by numerous universities. Fuel. As prices for gas rise and the price of fuel could have a significant impact on your budget. Expected price: $3.84 per gallon by the close of August 2022 according to . Repairs and maintenance. In contrast to other types of insurance, car insurance does not usually provide routine maintenance services, such as oil changes. It is important to ensure that your budget is sufficient to cover these things. Expected cost: Average of $9,666 for brand new cars According to . How to drive without buying If you're having trouble qualifying for a student car loan or have decided that it's not the right move for you, there are other options. Lease When you lease , you get a vehicle to use for a specific period and a certain number of miles. At the end of the term of the lease, as long as there's no damage on the vehicle or the miles you've been given and you're not in violation of the lease, you can hand the vehicle it back to your leasing provider and walk out. Since you don't actually own the car , and only have it for a set periodof time, the monthly installment for a lease will typically be lower than a loan. If you wish to pay terminate the lease, you can opt to do so if it's stipulated in the lease contract. Renting a car only require a car occasionally, it is worth renting a car whenever you're in need of one. While renting a car is more expensive on a daily basis than a car loan, if you only need the car for a few times throughout the year, it could be more affordable. When you're renting a car, you also don't need to worry about maintenance or fees or taxes. Car sharing is another option, as is subscribing to an auto sharing service. Turo is a peer-to-peer vehicle rental service, where you can rent cars directly from individuals. It will be similar in terms of cost and ease as renting a car from a company. If you live in an area that is accepted, you can subscribe to the car sharing services like Car2Go or Zipcar. These services usually require an annual or monthly membership and allow users to rent cars at cheaper rates by the hour or throughout the day. The bottom line: While it may seem difficult to get auto loans for college students, it is possible. Take your time to locate a good car and explore getting a co-signer, if it's possible. You should also speak with a variety of lenders to compare rates to find the best possible deal. Take into consideration all the additional costs that come when you own a car, and determine if you could save money by using alternatives such as leasing, ride-sharing or public transportation. Learn more


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Authored by Points and miles Expert Contributor

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



Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to control their finances with precise, well-studied information that break down complex topics into manageable bites.






Auto loans editor




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