Quick Auto Financing Tips for College Students
Some college students are fortunate enough to receive a car as a gift from a relative, but many others must buy their set of wheels on their own. Applying for a car loan is a common way that adults of all ages may pay for a car loan, but young adults may not have experience with this type of financing yet. If you are a college student preparing to apply for your first vehicle loan, you can easily follow these tips to obtain a great deal on your car loan.
Save Money for Your Down Payment
A down payment is not always needed when you apply for a car loan. Many lenders offer full financing on new vehicles. However, if you are a young adult with a limited credit history, a down payment may help you to qualify for a better interest rate and loan terms. In addition, making at least a modest down payment can help you to avoid being upside down with your car loan in the future. A good rule of thumb is to make at least a 10 to 20 percent down payment on the purchase of a new vehicle when possible. If you do not have funds available for a down payment, consider spending a few months saving money before you apply for a loan.
Determine If You Need a Co-Signer
In order to qualify for an auto loan, you need to prove that you have the financial ability to make the loan payments. If you are a full-time college student without steady income, you may be hard-pressed to be approved for vehicle financing on your own. Many auto lenders may require you to add a co-signer to the loan request, such as an older sibling with a job or a parent. You can speak with a few auto lenders before you apply to discuss your situation and to assess your need for a co-signer. If you need a co-signer, choose an individual with a great credit rating and minimal debts, if possible.
Review Your Budget
Another important step to take before applying for your first auto loan is to review your budget. Your car loan amount should be comfortable for you to make regularly. Remember that you will also need to pay for vehicle repairs and maintenance, gas and auto insurance. If these expenses will stress your budget or will be unmanageable, you can either save more money for a down payment or buy a less expensive vehicle. Be aware that your auto loan can help you to build a good credit rating, but if you fail to make regular payments, it can damage your credit rating.
Get Pre-Qualified for a Loan
Now that you have a good idea about what you need to qualify for a new auto loan and about what loan terms you are looking for, you can look for a few lenders to apply for a car loan with. Ideally, you will request written quotes from two or three lenders on your own. Choose lenders with competitive rates and a good reputation for providing great customer service. You will then take the best quote that you found to your dealership. The dealership will try to beat the rate and terms that you found on your own. While the dealership cannot always beat the terms that you found, this step will give you peace of mind that you have located a great deal on your auto loan.
Buying your first car is a process that may be filled with unknowns, and many of the questions and concerns that you have could relate to the auto financing process. Take your time to educate yourself about vehicles and financing as you go. Remember that there is no rush to buy a car immediately, and you should ignore a salesperson’s efforts to push you into making a hasty decision. Take your time to ensure that you get a great deal on your car and that you set up a car loan with affordable monthly payments. This may be a learning process that can help you when you apply for other types of financing in the future.