A car can be a necessity for a college student, especially if they have a part-time job. Unfortunately, it can be difficult for students to get a car loan because they have no credit history and insufficient income. Getting a student car loan is possible, however, and it is important to follow these tips when looking for financing for your car to ensure that you fit the eligibility criteria for a loan.
- Open a checking and savings account and start working on your banking history. Make regular deposits and make sure you never spend more than you have in your account. Showing that you can manage your money will make you more desirable to lenders.
- Check with your credit union or bank to see if they have student car loans available. You will have a greater chance of being approved if you have a business relationship with the lending institution. Alternatively, you can start with the lender that your parents use, as long as your parents have a good credit history.
- Complete a loan application. Your lender may require a recommendation from your bank and proof that you are currently enrolled in a university. If you have not yet secured a part time job, that is not necessarily a problem.
- Check with the lender to see if there are any benefits available to students. Many lenders offer students lower interest rates and a longer repayment period. In addition, many lenders will provide a further interest decrease if your parents serve as cosigners on the loan.
- Carefully read your loan quote and make sure you can manage the payments within your budget. Remember that your expenses will not include loan payments, but will also include gas, insurance, and upkeep on your car.
- Make sure you make your loan payments on time each month. Since this is likely to be one of the first factors in your credit score, missing payments or making them late can ruin your credit history and negatively impact your approval and interest rates on future loans.
Getting a student car loan can be difficult, but is not impossible. The important thing is to make sure you do not finance a car that is beyond your budget. Yes, you would like to drive the latest sports car. There will be time for that after you graduate and get a job. For now, find a cheap, dependable car that will get you where you need to go without having payments that are beyond your means.
About the Author
This guest post was written by Michael. Michael is a finance expert and content writer for carloan.com.au.