A student car loan can be an ideal solution for students (usually 18 and older) who can’t afford to buy a car themselves. There are now numerous companies that will gladly loan money to students, and many of these are located online. They work with people who have poor credit or no credit history, and may be a good option if a student can afford to make regular payments.
Having affordable payments and paying on time is the most important part for people who obtain a student car loan. There are companies that will lend quite a bit of money to a student, when that student really doesn’t have the means to repay a loan. It can help to use loan calculators to determine affordability of payments, and people should also take into account other expenses associated with owning a car. These can include insurance, which will generally be expensive because if the car is being financed, it must carry comprehensive and collision insurance. Other costs are car maintenance, fuel, and any associated fees to park or store the car.
It isn’t always the case that a student car loan is the best bet for all people. Those who have a long work history and are continuing to work full time while attending school may be better off not applying as a student. Due to additional risks of nonpayment associated with students, interest rates are usually higher. It’s a good idea to apply for several loans with different lenders to get the best interest rate, but rates may still be better if a person simply applies for a non-student loan, when the person has a job and good credit.
One option that can be exercised to reduce interest rates on a student car loan is to have parents or relatives with good credit cosign on the loan. This can help build credit rating, but at a lower interest cost to the student. It’s still important that regular payments are made because failure to make payments will damage the credit rating of the cosigner, or may obligate them to make payments.
Under some circumstances, applying for a student car loan is more advantageous. Motivated lenders may offer better interest rates or low down payment options. It’s really important to read all the fine print associated with any loan before making a decision, since some “offers” may not be great deals and could mean price of the car or other features are more expensive than average.
Some people wonder if they can use regular student loans to buy cars, and this is a difficult question to answer. Certain lenders may frown upon this use, though they tend not to regulate it. The one thing that might be important to consider is that these loans usually aren’t repaid until after education is ended, and by then any car purchased usually can’t be sold to repay the loan. It can mean spending years repaying on a car a person no longer owns, but usually interest rates are lower when this method is employed. Bear in mind that amount of aid may be capped depending upon school choice and years in school, and using a regular student loan for a car might limit ability to obtain enough money to attend school in the future.
