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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 that provide objective and original content, by enabling you to conduct your own research and compare data for free and help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The products that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on this site, including such things as the order in which they may appear in the listing categories, except where prohibited by law. This applies to our mortgage home equity, mortgage and other products for home loans. But this compensation does not influence the information we provide, or the reviews you see on this site. We do not contain the universe of companies or financial offers that may be open 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 writer for Bankrate. Dan covered loans, home equity and debt management in his writing.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to manage their finances through providing concise, well-studied and well-researched content that breaks down otherwise complex topics into digestible chunks.

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If you’re a student trying to purchase a car and you’ve found it a bit more challenging than you thought. Although car loans for students are available but many lenders are wary of providing loans to first-time buyers or those with a weak credit histories. But students can get students can get student car loans are feasible particularly when you have a steady source of income, excellent scores or can find an amiable friend or family member to co-sign on your behalf. How to buy an automobile for a college student even if you’re in college or have a poor credit score there are ways to finance a car. Although you might not have the same choices as someone with an established job and credit history however, it’s possible. The process of obtaining a car loan as a student looks just like the process would for a postgraduate driver who is looking to finance. But if you’re in a lower-cost student budget, it is what matters. This is especially than the case when monthly averages are at an all-time high, with used cars at $515, and new cars more expensive at $677 in the second quarter of 2022 according to . Follow these steps when you begin your car purchasing process. Create a budget that is realistic. Take advantage of the car loan to figure out what you can afford to spend every month. When budgeting, be certain to concentrate on the of the vehicle and not just the cost of the vehicle. Save for a down payment. While saving for a down payment may be difficult for students, it could result in lower rates and monthly payments. If you’re willing to wait, the best-case option is 20 percent of the purchase price. Even if you are unable to pay that much, try to budget for at least a small down cost. Choose the right car for you. It’s important to think realistically about the best car to meet your requirements as a young adult. Although it might seem appealing to purchase a brand-new vehicle with the most recent features, consider where you’ll park it, the number of possible passengers you’ll be able to accommodate and even the price of gas for an option that is more luxurious. Secure the financing. It’s a good idea to apply for a loan prior to going car shopping whether online or in person- to ensure you know the amount you are able to afford and skip out on dealer markups. Based on the lender the prequalification process will be a soft credit pull. You should also be prepared to share necessary documentation to verify the information you supply. Negotiate. Negotiating can be quite difficult, particularly for a young person. In the case of car purchasing as a student it is wise to bring an adult friend or someone from your family with you. This will make you will be more confident about pushing for the deal you deserve. No whatever, be positive and don’t be afraid to walk away. How to improve your chances of loan approval. Like any loan with the highest favorable rates, terms and acceptance are available to those who have good credit. As a student with very little credit history, getting approved can be difficult. But there are a number of ways to improve your chances of getting approval for a car purchase as an undergraduate. Provide a steady source of income. The best way to get a car loan as a student is to prove a reliable earnings source. Before giving you an auto loan lenders require proof that you have a reliable method of paying the monthly installment. If you’re employed with a track record of at least a few months of income, you will increase the likelihood of getting accepted. Speak to banks or credit unions with whom you already have accounts . If your income isn’t reliable sources of revenue, or if your income fluctuates or is not consistent it could be a problem getting a car loan from most lenders. If you already have an account with an institution in your area it is a credit union, you could call it. It could offer student car loans and other services targeted towards people who are in your position. You may be able to speak directly to an loan officer or manager with approval powers. The main advantage is that it could be more straightforward to present your case and convince that person in person. Find a co-signer A different alternative is to ask a trusted friend or family member to help you with your car loan. If you have a co-signer then the lender will also look at your co-signer’s credit history and income. The advantage is that your loan is much higher likelihood of being approved. One drawback, however, is that your co-signer is also legally responsible for the vehicle loan. If you’re unable to pay your loan on time, it could create friction between you. Have good grades. Like lenders who consider credit background, some lenders consider their GPA as a metric for loan approval. If you carry a strong GPA you should consider sharing it with potential lenders. Since while not all lenders will take into account it, in certain cases, good grades could mean more competitive rates. Where can you shop for cars while an undergraduate A lot has changed about the way that people buy and sell vehicles throughout the years, but one part has remained the same -If you’re able to look around and shop around, you’ll save money. The shorter time you have to research all options, the more you’ll pay for your car. Friends and family Finding a purchase from a family member is most likely to be the ideal situation. A car purchase from someone you trust limits the possibility that you’ll purchase an unsatisfactory product. Additionally, depending on who you are buying the car from, they might be willing to cut you an offer on the cost. This could be an ideal scenario, if there’s no one knows anyone who is looking to sell their car then you’re out of the market. Local car dealers While many instances have gone online, there is still a merit in visiting local car dealers. Most dealers will have their inventory online as well and you’ll be able to see the cars available before you head to the dealership to test drive. While making use of the internet to aid you in your car search makes a lot of sense for many, there are those who prefer seeing and experiencing the car in person. On the internet, in addition to browsing the online sites of local used and new car dealers, there are many other . If you are interested in buying online, you can purchase with confidence using online marketplaces for used cars, like or . Facebook Marketplace, Craigslist and eBay are among the sites on which you can search for individuals selling their vehicles privately and other items, but keep an eye on what to watch for . Other costs to consider Keep in mind that it’s not just the price of your car loan which will impact your budget. You must ensure that you have the space to cover these other auto-related costs as well. Sales tax and registration fees. These taxes and fees vary according to the state and local authority So, make sure to check the amount they’ll cost you. Expected price: between $400 to $700 based on your state as per . Insurance. Most states require you to have at minimum liability insurance. Take a look at a couple of different agents and brokers to find the coverage which best meets your requirements. Expected price: $1,771 based on your home state, driving history and vehicle type according to . Parking. Especially if you’re a 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 data compiled from several universities. Fuel. With gas prices rising, the cost of fuel could have a significant impact on your budget. Estimated cost: $3.84 per gallon by the end of August 2022, according to . Repairs and maintenance. Like other types of insurance, car insurance doesn’t usually provide routine maintenance services, such as oil changes. You should ensure your budget is sufficient to cover these things. Expected cost: $9,666 for new vehicles According to . How to drive a car without buying If you’re having difficulty being eligible for a student auto loan, or if you’ve concluded that it’s not most suitable option for you There are alternatives. Leasing When you lease, you get a vehicle to use for a specific time period and a specific amount of miles. When the lease is over, lease term and as long as there is no damage to the vehicle and you’re not exceeding 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 away. Since you don’t actually have ownership of the vehicle and you only have it for a certain period, the monthly payment on a lease is usually lower than a loan. If you want to terminate the lease rather it is possible if the option is in the original lease agreement. Renting a car if you just require a car sporadically, you can consider hiring a car whenever you’re in need of one. While renting a car is costlier on a daily basis than making a car payment, if you only need the car for a few times a year, it could end up being more economical. When you rent a car and you don’t have to fret about maintenance, tax or charges. Car sharing is another option. joining the car sharing service. Turo is a peer-to-peer vehicle rental service, where you can lease cars directly from the owners. It will be similar in price and convenience to renting a car through the company. If you live in an area that is accepted, you can join an auto sharing service such as Car2Go and Zipcar. These services usually require an annual or monthly membership and allow you to rent cars for lower rates per hour or by the day. The bottom line: While it might seem difficult to secure car loans for college students but it’s possible. Make sure you research the best car for you and consider the possibility of a co-signer if it’s possible. You’ll also want to talk with different loan providers to evaluate rates to find the best possible deal. Consider all of the extra expenses that go when you own a car, and consider if you are able to make do with alternatives such as rental, ride-sharing, or public transport. Find out more

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Authored by Points and miles Expert Contributor

Dan Miller is a former contributing writer for Bankrate. Dan wrote about loans as well as home equity and debt management in his work.

The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to take control of their finances through providing precise, well-studied information that breaks down otherwise complex subjects into bite-sized pieces.

Auto loans editor

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