Auto Loan
Student Car Loans
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As a student, managing finances is one thing, while managing time is another. Having your own mode of transportation will save you time and help you manage things better. But is it easy for you to get a student car loan as a student? Do lenders offer loans to recent high school graduates? Is it easier to get one with a job offer or a cosigner? Here is everything you need to know about student car loans.
Key Takeaways
The basic nature of a car loan is that you get a lumpsum amount for your needs and then pay back the amount in regular installments along with the interest.
Student car loans, while varying in specific terms, generally share common features. For instance, typically repaid through monthly installments over two to six years, these loans may have fixed or variable interest rates. In the case of fixed rates, the monthly payment and interest rate remain constant throughout the loan duration. However, the variable rates may fluctuate periodically, potentially increasing over time.
Given that the vehicle secures most auto loans, failure to make timely payments could result in repossession. To determine eligibility, lenders typically assess credit history, employment background, and existing debts. While meeting these requirements can challenge college students, securing approval is not impossible, especially with the right lender.
Finding student auto loans is not as difficult a task as you assume. You can shop for a loan as a student in banks, credit unions, and online lenders. However, whichever place you opt for your car loan from, ensure that you conduct enough research so that you can shop around and compare the loans. This will certainly help you lock in a better rate.
| Program | What it Offers |
|---|---|
| GM College Discount | $500 cash reward for buyers. |
| Some borrowers may qualify to defer their first payment for up to 90 days. | |
| Ford Drives U | $750 cash reward for purchases and $500 for leases on Ford and Lincoln vehicles.
Eligible for high school seniors, grads, and trade school students. |
| Nissan USA College Grad Deals | $500 cash back for soon-to-be and recent grads with proof of employment within 90 days. |
| Toyota College Grad Program | $500 rebate for soon-to-be and recent college grads, including trade or vocational school graduates.
Qualification requires proof of employment or a job offer. Co-applicants are allowed. |
Yes, there are different options for you to get a car loan as a student. However, you need to overcome challenges as a student to receive a car loan.
As a student, you might not earn enough to repay a loan. This poses a challenge as lenders will approve the loan amount based on how much you can afford. Therefore, getting a loan becomes easier if you can prove how much you can pay. Here are some ways you can show that you can repay the loan.
If you have a cosigner, you'll have someone to take responsibility for the loan and make the payments.
Even though it can increase the amount you'll pay, the rates will be slashed over time. Therefore, it is more affordable for students.
Part-time work ensures a stable income and cements the fact that you can afford the repayment of a loan.
Since poor credit and low income can be the reason for high interest rates, loan repayment becomes difficult.
While lenders don't offer discounts for good grades, consistent academic performance is worthy of ensuring that you get your student car loan approved.
A higher credit rating improves your chances of getting approved for lower interest rates. Unfortunately, building credit quickly is challenging. For individuals with no credit history, it may take up to six months to use a loan or credit card to start establishing a credit score.
However, certain lenders may be more lenient with credit requirements for college students seeking auto loans, giving greater importance to the absence of a negative credit history. Suppose you require additional assistance with building credit. In that case, you might consider being added as an authorized user to one of your family members' open credit card accounts or taking the time to establish a positive payment history with a secured credit card.
Another issue that arises while applying for student auto loans is the high auto loan payments. For instance, the credit score, which has just started building, and the high interest rates can result in high monthly auto loan payments. Here are some ways to reduce high loan payments.
A bigger down payment would mean a lower monthly payment. In other words, you'll be paying a lumpsum amount upfront, so you'll have to pay less interest rate and related fees. Therefore, you can consider saving before making the downpayment or save enough before making the payment.
A used car is a good option if you are applying for a student loan; then, there are chances for you to get better rates for a used car than a brand-new one. In addition, since its use will be limited, a well-maintained used car will be cheaper to use and manage finances.
Discounts for student car loans may not be very common. However, you can always shop around for discounts and receive lowered rates. Here are some discounts you may commonly come across while looking for discounts as you apply for a student car loan.
| Discount Type | What does it offer? |
|---|---|
| Autopay | Set up automatic payments for your loan to potentially receive an interest rate discount. Check the specific requirements, as you may need to open an account at a specific bank to qualify. |
| Current Customer Discounts | Explore special incentives for borrowing at a bank or credit union where you already have a "relationship," such as an open account. |
| Membership Discounts | Lenders may discount members if the loan is used to purchase through a particular dealership or car-buying site. |
| Car Buying Services | Some credit unions provide a rate discount when using their in-house car buying service. These services are often free and can assist in finding cars within your budget and scheduling test drives. |
Yes, it can be tempting, but never do it. In addition to it being an illegal act, you might take longer to pay off the auto loan. Therefore, student loans should be utilized for educational purposes like payment of fees and not for non-educational expenses like purchasing a car.
Consider having a cosigner with good credit, such as a parent or family member, to ensure you qualify for an auto loan while attending school.
Work on improving your credit by paying off outstanding debts and responsibly using a low-limit credit card for everyday purchases. Building a positive credit history is required for a loan qualification.
Explore becoming an authorized user on someone else's credit card to leverage their positive financial habits for credit building.
Increase your chances of loan approval by saving money for a down payment. Consider working part-time to supplement your income while balancing work and academic responsibilities.
Establish and adhere to a budget when purchasing a vehicle. Avoid the temptation of high-end models and calculate your affordability by factoring in monthly living expenses, loan amounts, and down payment.
Some lenders offer incentives for students with good grades. Maintain high academic performance to qualify for a lower interest rate or discounts on your car loan. Showcase responsibility and dedication to your studies.
Demonstrate financial stability by securing a steady income source, even part-time employment. A job can strengthen your appeal to lenders, showcasing your ability to meet monthly payment obligations.
Explore debt consolidation if you have outstanding student loans. Consolidating debt involves combining all owed amounts into one account, simplifying monthly payments. Confirm eligibility and restrictions with your lender.
Investigate whether your student loan can cover vehicle expenses. Consult your student loan provider or the financial aid office at your school to understand the terms and ensure compliance to avoid penalties for fund misuse.
Securing a student car loan as an international student in the United States demands additional attention. Firstly, you should demonstrate your capacity to repay through sources such as income or savings or enlist the support of a US cosigner. Without a US credit history, highlight your positive credit standing from your home country.
Similarly, you should align the loan term with the duration of your visa. In addition, you should have a valid driver's license and insurance. It is better to go for lenders who specifically cater to international students for more favorable loan terms and deals. Here are some of the online auto lenders offering financing for international students.
Kora
If you are a green card visa holder with a GPA of 2.0 plus or a graduate student with a GPA of 3.0 plus, you will get a student car loan. You don't need a Social Security Number or a credit score for a student car loan application with Kora.
Stilt
You can sign up for a student car loan without a cosigner and credit history with Stilt.
Lendbuzz
With Lendbuzz, you can qualify for a student auto loans with your education level and employment history, without a credit history, Social Security Number, or a cosigner.
While getting a car loan as a college student may seem difficult, it is possible. Find a good car by doing extensive research and, if possible, consider getting a cosigner. Speak with several lenders to compare rates and get the best offer. To find the most economical choice, account for extra expenses related to car ownership and compare them to other options like leasing, ride-sharing, or public transportation.
While you can opt for student car loans, buying a car with your student loan is illegal. This is because the student loans you have is to pay your tuition and other educational expenses.
You shouldn't spend more than 10% of your income on your transportation expenses. However, you should consider not only the student car loan. You should also consider parking passes, fuel costs, regular maintenance, and auto insurance. This makes car ownership not very cheap for college students.