|Getting a car loan as a college student may seem like a daunting process, especially with a heavy workload at a school like the Massachusetts Institute of Technology.|
Save for a Down Payment
Making a down payment on your vehicle purchase lowers your monthly payments and the interest rate you'll pay on the loan. Reducing the overall cost of borrowing money is crucial when you are trying to balance all of the costs associated with attending college. As a student with no credit history and no full-time job, having a sizable down payment will help you establish credibility with a lender by reducing their risk. Remember, a larger down payment means a smaller monthly payment.
Get a Part-Time Job for Extra Income
Lenders like to see a source of income other than financial aid and scholarships. If your schedule can accommodate even a few hours of work each week, getting a part-time job is a great idea. The extra income will help ease the burden of a monthly car payment and will make you look more financially stable to the lender.
Consider All the Expenses Associated with Driving a Car
Fuel, repairs, maintenance, and replacement parts like tires and windshield wipers are all necessary costs that go with driving a car. When shopping for a vehicle, make sure you understand how the car's estimated fuel mileage, costs of repairs, and costs of necessary maintenance like oil changes could affect your budget. If the vehicle comes with an extended warranty, find out if you must adhere to a predetermined maintenance schedule with the dealership. If so, you should be aware of the costs upfront. Ask how much a common repair for the car's make, model and year usually costs. Some vehicles are simply more expensive to drive. For example, luxury cars may require a more expensive oil change and specialty tires. Fixing a vehicle that is common can be less costly because the parts are readily available. Be sure to check the insurance rates on the car you choose before making a purchase, as well. Rates fluctuate from one city to the next and in some areas, driving a certain type of vehicle significantly reduces your insurance bill.
Consider Choosing a Lender that Specializes in Serving College Students
While the dealership where you buy your car can offer a variety of financing options, they may not be able to meet the specific needs of college students who don't have an established credit history. Online lenders like Boro offer car loans to college students, even if their credit file is thin. Their innovative approach to loan underwriting includes much more information than the typical credit application. Your profile, educational background, earning potential post-graduation, and other important personal factors combine to give Boro a complete picture of your ability to repay a loan. While traditional lenders typically only consider an applicant's FICO score, newer online companies recognize the need for non-traditional financing for college students. Using a company that specializes in meeting the financing needs of college students doesn't mean higher rates and fees. In fact, Boro offers the lowest rate possible when they issue car loans for college students. Getting a cosigner isn't possible for everyone, and Boro understands that many college students prefer to make their personal financial decisions without requiring approval from a cosigner.