By: Jessica Malitoris
.jpg.aspx?width=75&height=75) As a college student, finding a car loan can be difficult. Not having a full time job, not having built up a credit history, and/or having a poor credit score can be major impediments. Fortunately, companies frequently offer student-specific car loans.
What makes these car loans different? For starters, they are only offered to students. Usually, to apply for a student car loan you must first obtain proof of enrollment through the registrar’s office at your university.1 Being a student means it is much easier to obtain a car loan, and lenders don’t want non-students to take advantage of this. Students are a high-risk group, meaning that you will likely end up with higher interest rates. However, it is an excellent opportunity to begin building up a credit history.
Where can you get student car loans? Many car manufacturers and dealers offer car loans, as well as banks and an increasing number of online lending companies.2 Be sure to shop around to look for good interest rates, and watch for any “extras” that might be more trouble than they’re worth. If your parents have a good credit history, you might consider using the same lender that they do.
If your parents or relatives have a good credit history, cosigning can be a good idea, as well. This can reduce your interest rates, and also give you a bit of security. Though a student car loan is a great opportunity to build credit, if you fail to make payments on time, you will not only damage your credit score, you will also damage that of your cosigner.3
When is it a good idea to get a student loan? Student loans are best for those who have not worked much, and/or who have not built up a credit history or have built up a bad one. Those who are continuing to work full-time while at school or already have a good credit score will probably get better interest rates with a normal car loan.4
References:
1“How to Get a Student Car Loan.” http://www.ehow.com/how_2082492_get-student-car-loan.html.
2“Student Car Loans Can Get You Behind the Wheel.” http://www.studentfinancedomain.com/budgets/car_loan_for_college_student.aspx
3“What Is a Student Car Loan?” http://www.wisegeek.com/what-is-a-student-car-loan.htm
4Ibid.
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