Advice Center

Car Financing for Students: Exploring Your Choices

Managing finances as a student involves covering expenses like tuition, books, housing, and daily necessities. Additionally, having reliable transportation is essential, especially for individuals who work while attending school and live far from campus. However, purchasing a car outright can be challenging due to financial constraints.

Securing car loans for students is a viable option for those with a good credit history and the ability to make regular payments. Even though being in college might mean limited credit history and existing education loans, you don’t have to abandon your dream of purchasing a car. If you’re unable to secure an auto loan on your own while attending school, you can consider other options. Let’s explore them.

Find a Co-Signer
A co-signer serves as an additional borrower on your loan agreement. Should you find a person with solid credit, like a parent or other family member, who’s ready to assume financial responsibility, they could aid you in securing an auto loan.

Boost Your Credit Score
Enhancing your credit rating can also help you qualify. If you have existing debt, aim to allocate additional funds each month to reduce your outstanding balances more rapidly.

Those who have yet to establish a credit history should consider obtaining a low-limit credit card and utilizing it for daily expenses. By consistently using it and clearing the total balance monthly, you demonstrate your reliability as a borrower.

Become a Credit Card Authorized User
An alternative approach is to be added as an authorized user on someone else’s credit card account. Several companies inform credit bureaus about the activity of authorized users. This means the primary cardholder’s good financial habits could benefit your credit score. However, it’s crucial to verify first whether the credit card issuer includes authorized users in their reports to credit agencies.

Land a Job
Securing a regular source of income helps you appear more stable to lenders, potentially boosting your chances of getting approved for a car loan. If you’re unemployed while in school, it makes it challenging to demonstrate your ability to manage monthly loan payments. However, even securing a part-time position can contribute to establishing your financial reliability to potential lenders.

In Summary
Car loans for students require extra groundwork, but you still have viable options. An auto loan represents a substantial commitment, so it’s wise to carefully evaluate your financial situation and determine how a car aligns with your current lifestyle needs.

Exploring options for an auto loan as a student is a smart move, researching auto loan terms and requirements at several institutions can lead you to the deal that is right for you. For more personalized advice and to discover your financing options, reach out to Energy One Federal Credit Union today.