College Student Auto Loans
Buying a Car in College - 101
College student auto loans can be a bit tricky, because there are oftentimes many different, limiting factors involved.
That being said...
Don't get discouraged! There are auto lenders that specialize in college student auto loans and below I'll show you three great sources to apply for yours.
Some of the factors that
can make getting approved tricky are:
- Short job history
- Limited income
- Limited credit history (if any at all)
- Limited down payment
- Part time employee vs. full time
Now, some, none or all of those may apply to you, but the important thing to keep in mind is that it is possible to get approved even if you have all of those working against you.You just need to know
the right places to look!
you'll find below:
My Dealership Source
for College Student Auto Loans
One of my favorite lending sources for any type of bad credit, no credit and/or college student auto loans is Credit Acceptance Corp.
They guarantee approvals and it doesn't matter what your credit situation.
If you've got $500 (either cash or trade equity) down and a provable source of monthly income...Congratulations! You're Approved!
Unfortunately, Credit Acceptance Corp does not loan direct to the consumer and you have to work with one of their contracted dealerships in order to buy a car with their loan approval.
This isn't terrible, because you'll need a special finance loan specialist to help structure your auto loan to fit Credit Acceptance Corp, or a similar lenders, program.
Again, you just need to know where to look so that you're not spinning your wheels at the wrong dealerships with finance managers that don't know how to get approvals for college student auto loans.
Is A Cosigner Required
For College Student Auto Loans?
No. That's the simple answer anyway. You are not required to have a cosigner as long as:
- You are of legal age to buy a car
- Have provable monthly income
Pretty simple. There may be additional requirements you might have to meet, but that will vary from auto lender to auto lender and should not be anything out of the ordinary.
When you might
need or want a cosigner
If you walk onto the lot and point at the $50,000 Mercedes and that's the only car you would consider buying...Wow! Someones spoiled :)...Then guess what? You'll probably need a cosigner.
Some other benefits to
having a well qualified cosigner:
- Better interest rates
- Lower payments
- Longer finance terms
- Can buy more vehicle
- Less money down
I'd like to repeat that it is not necessary to have a cosigner to get a student auto loan, but it can be beneficial. If you do have a well qualified cosigner that's willing to sign with you, then you will definitely have more options available to you.
Is Down Payment Required
For College Student Auto Loans?
Down payment is not always a requirement, but will vary from lender to lender and from customer to customer.
If you've got money to put down, I can tell you that the more the better!
As with a cosigner, you have many more options available to you with money down and usually stand to get a better approval. This is because the lender sees you're making a financial commitment to the car and they assume less risk.
That being said, I've been able to get many student auto loans approved with limited or no money down. Again, it will limit (sometimes eliminate) your options though.
If a down payment is required, you can usually use equity from a trade in. Yes, even if it is an old "beater."
Usually the loan specialist that is structuring your loan will show your trade ins value to be more than it is really worth in order to get your loan in line with the lenders requirements.
"Creative Financing" has helped me to get more than one tough loan approved in the past.
It's important to keep in mind that when you are first starting out, a college student auto loan can be the beginning of a bright credit future or...It can be the beginning of the End!
If you buy a car that's all about impressing friends and/or the opposite sex, then you could find yourself in a huge financial hole rather quickly. This could lead to you losing your new car to repossession.
This will hurt, bad, for the next seven years...Start small, build some credit and then progressively move up.Crawl before you walk
and walk before you run!
Another Very Important FYI
Another factor that is often overlooked when buying a car in college, are auto insurance rates.
If you are not going to be able to use a parents policy for coverage, then I'd definitely recommend getting some quotes before you sign on the dotted line.
I've seen many a customer buy a car and leave happy with their $200 a month payments, that they could easily afford, only to have them come back the next day frustrated because they couldn't afford the $400 a month auto insurance.
Depending on the dealership and state law, they may or may not take the car back. Usually they won't unless it's required by law and your stuck with the equivalent of a house payment every month. Trust me, the affection for your new car will wear off quickly after a couple of payments.
Insurance is a very major factor to consider when buying your first car. I personally use Esurance easy online car insurance and it's well worth the 2 minutes it takes to fill out the application to get a quote.
Three Sources To Apply
For Your College Student Auto Loan
As mentioned earlier, I use Credit Acceptance Corp and roughly 4-5 other national lenders to secure approvals for my customers.
There are dealerships across the country that have special finance departments that cater to customers with bad credit, no credit, bankruptcies, foreclosure and of course, college student auto loans.
Option #1 - Funding Way
One of the best sources I've found for locating these dealerships in your local area that use Credit Acceptance and/or similar lenders, is Funding Way.
They are a subsidiary of Auto Credit Express...Very big!
Simply complete this 60 second, no obligation Auto Loan Application - Click Here!
Some Basic Qualifications:
- No repossessions in the past year unless included in a bankruptcy.
- All applicants must be at least 18 years of age.
- Service not available for purchases outside of North America.
- Service not available for purchases from private parties or refinancing.
Option #2 - Buy Here Pay Here
My other source is both the car dealer and the lender. There are some really good ones all across the country. There are also some really bad ones.
Be sure to have the vehicle you are going to buy inspected by a trusted third party to keep you from buying a lemon. If they won't let you have it inspected, then I'd have to question what type of cars they sell and move on to another.
At least ask to see and get a copy for yourself of how they inspected and reconditioned the vehicle prior to buying. Paperwork like this can help immensely if you have to go to court down the road.
Option #3 - Credit Union
An additional source for your auto loan would be your local credit union. Depending on the credit union, they will sometimes offer these types of loan programs.
Unfortunately, due to our current economic environment, even credit unions have tightened up quite a bit and college student auto loans have become more difficult to get approved for, but hey it's worth a shot.
Return from Student Auto Loans to Bad Credit Auto Loans
Go to Insider Car Buying Tips home