If you need a vehicle while you are still in school you may have to get a car loan in order to finance you automobile. Car loans are secured loans that are based on credit, and while very few lenders will make any kind of exceptions while you are still in school, it is not out of the realm of possibility to get an auto loan while you’re still in college.
What most students have difficulty with is the income requirement, as most lenders, and even dealerships that provide car loans to students will want to still see that you make enough money before they’ll hand down an approval.
This means that simply having a part-time income won’t be enough if you need to get a car loan while you’re still in school, and while there are other options that can get you approved such as getting a creditworthy cosigner, these things may not be available to you depending on your situation.
Getting a car loan while you’re still in college will ultimately come down to your ability to show the lender either the appropriate credentials in terms of credit and income, or your ability to provide the lender with a creditworthy cosigner.
Deals for Wheels
College students often ask me about the possibility of somehow working out a unique arrangement with a lender that would allow them to get a car loan with regard to being in college. This can sometimes happen, although it is very rare for a lender to weaken their guidelines in terms of credit and income just because you’re in school.
Some lenders will advertise that they specialize in providing college students with car loans, although they often are simply “bad credit” lenders who can make some exceptions when it comes to your credit if you can prove that you are in college.
That being said, you’ll still need to have an income, and this is where most students have difficulty. Part-time incomes that are typical for most college students will not satisfy most lenders’ approval criteria, although if you are applying to the right sort of auto loan lender, you may be able to get away with only having a part-time income.
Overall car loan lenders can be more lenient when compared to most student loan lenders because the loan is secured, and they can simply repossess your vehicle if you are ever in default on your note.
The number of lenders, and other financial institutions that provide car loans is vast, and the three major categories that I like to divide them up into include:
- The major financial institutions
- The smaller financial institutions
- Dealerships
The major financial institutions include the bigger banks, and the smaller financial institutions include your local banks and credit unions. Dealerships are included because they often act as an intermediary between lenders and borrowers, although they sometimes do in-fact serve as the lender in some cases.
If you have credit issues, or problems with income, your best bet would be to apply to a smaller lender, or perhaps an independent dealership, as these types of places can often make adjustments that some of the bigger organizations simply cannot.
Getting Car Loans When In College
I support getting a car loan when you’re in college if you truly need a vehicle in order to function in school. You may need it to maneuver around the area where your school is located, or you may need it to simply matriculate to school.
Only you can make the correct determination of whether or not you need a vehicle while you are still in school, and if you have concluded yes, then I urge you to try and work out an arrangement that will keep your costs down. This means getting a lower-priced vehicle, and doing whatever you can to keep your debt against the automobile low, and cheap.
Get your parents involved if need be, as they can mean the difference between getting an interest rate that is upwards of ten percent, and getting a fairly competitive rate. Explore as many lenders as you possibly can in order to find the right deal. The better your credit is, the more options you will have when trying to locate a lender.
If your parents are willing to cosign, great, if not, then don’t discount some of the “sub-prime” lenders that may be able to work with you. While these types of lenders are often overlooked by students, they can sometimes actually get you a deal that can work for your situation, and while the cost may be a bit high, if you absolutely need your car to get to school, it may be something that you cannot turn down.
