Ideally you’ll want to buy a car with cash rather than getting an auto loan. But college is expensive and students rarely have enough money in the bank to do that. But there’s nothing wrong with borrowing money to buy a car, especially if you really need one to get to and from work or school. Here are some ways that college students can afford to buy (or get a loan) on a car.
In order to qualify for an auto loan you’re going to need average to good credit. You can establish a history of good credit by using a credit card responsibly. This includes making your payments on time and not using up all of your available credit.
Car dealerships don’t like selling a car when the buyer has not put any money down. The bigger the down payment you put in the lower your loan is going to be. When you put in a good down payment you’re going to get a lower interest rate. So save up your money in a savings account and don’t go to a dealership until you have at least 20% to put down.
If you don’t have good credit you’re going to need to convince a friend or relative of yours to co-sign the loan for you. When a loan has a cosigner, the credit of that person is used, rather than your own bad credit. Make sure and pay back the car loan on time because if you don’t, you may have just ruined a good relationship.
New cars are very expensive and overpriced. The moment you drive a new car out of the lot it has already lost a few thousand dollars in value. All cars lose value over the course of time, but new cars lose a lot of their value in the first couple of years. So choose to buy a used car in good condition while you’re in college.
College is expensive but if you want to buy a car you’re going to have to save money and decrease your expenses. You can save on rent by having a few roommates. You can save on gas by living on campus or within walking distance. To save on text books you can choose to rent your biology, chemistry or history textbooks rather than purchasing new copies.