Student Car Loans: How to prepare for your First Car Purchase?
A car is no longer a luxury. We have said this many times. However, buying a car seems like a privilege, especially when you do not have a credit score or a full-time job that pays well. Traditional lenders may reject your loan application for lack of financial stability. Bringing home those new set of wheels can become a daunting task if you are a college student or even a recent graduate trying to build your career.
If you want to make the car buying experience a pleasurable one, seeking the right advice and solutions will definitely help. But first things first: Buy a car only when you need it. You do not want to carry the burden of a car loan along with the pressures of college life. Opt for a vehicle if it allows for easy commute and easy access to job opportunities.
Buying a Car: What Problems do First-Time Buyers and Students Face?
1. Lack of Experience
As a student, you may have never purchased a car or any other asset on your own. It can make the entire buying process and financial procedure intimidating. Lack of experience means you can get stuck with a lemon or end up paying more for a car than its worth. In order to avoid getting ripped off by dealers and lenders, it is essential to conduct thorough research online and seek multiple options before signing on the dotted line. You can even ask your parents to assist you in making the purchase.
2. The Issue of No Credit History
Another crucial issue that young buyers face while buying their first car is the absence of an established credit history. If you do not have a credit score, lenders won’t be able to ascertain your credit worthiness. The majority of them will reject you or offer you high interest rates and lower LTV. To avoid an expensive student car loan, you need to apply with several lenders who are open to working with credit-challenged car buyers. Remember lenders believe that it is better to have a no credit score instead of a bad one.
Can a Student buy a Car?
When it comes to buying a car as a student, you have many options. Despite the obvious problems of lack of financial experience, you can still get a car.
1. Save for a Car
If you are not in a hurry to buy a car, you can save for a couple of months and then, buy it in cash. If you have the money, making a cash purchase is easy because you will not require any kind of loan approval. It won’t matter if your credit score is good, bad or non-existent. On the other hand, you will have to wait for your car and the cash purchase won’t help you build your credit score.
2. Ask your Parents to Buy You a Car
If your parents can afford to buy a car for you, you will be able to get behind the wheels quickly and without giving away a large chunk of your savings. The majority of parents offer to buy a used car for their college-going students to make them learn the responsibilities of owning a vehicle. If your parents are unable to buy you a car or you decide to buy it on your own, this option is not suitable for you.
3. Apply for First-Time Student Car Loans
Specially designed for first-time car buyers, these auto financing programs help you to buy a car with no credit history. Research to find online auto financing companies that help students secure car loans at the click of a mouse. By choosing a student car loan, you can buy a car and be on the right path of establishing your credit score. If you can convince any of your parents, family members, friends or employers to co-sign your loan agreement, you will be able to improve your approval chances phenomenally. It will also lead to lower interest rates.
How to get the Best Auto Loan Rates?
Just as you prepare for your exams, you must prepare for the car financing process. If you want to build a good credit score and ensure affordable monthly payments, follow the tips mentioned below:
- Find a job that allows you to make car loan payments and assume other car-related expenses. Falling behind on payments can deteriorate your credit score and increase your chances of repossession.
- Fix the down payment amount that you will pay to the dealer. It will reduce the loan amount and allow you to enjoy low monthly payments.
- Learn your credit score. A no credit score situation means you will still have a credit score, albeit a lower number. It will never be zero as expected by most student car buyers.
- Even if you have never applied for a loan, an old department card or a checking account may work in your favor and result in a decent financial history. So, keep a list of your financial documents (bank statements) ready.
If you are student who wants to buy his first car, you may face a few hurdles along the way. However, if you are prepared to solve them with tact and patience, you will be able to become a proud owner of a car.
Do you want to apply for student car loans? Work with a reliable subprime lender who offers the best deals to young college students who are buying their first car. Apply now to get auto loans with no credit score and bring home a car today.