So, you’re a student and you’re ready to buy a car. Congratulations! Getting a new set of wheels is an exciting time. But before you head to the dealership, there’s one important thing you may need to do first—get a loan. If you’re still in university or tafe, that can seem like a daunting task. But don’t worry, we’re here to help. Here are five tips for getting a car loan as a student.
1. Start by checking your credit score.
Your credit score is one of the most important factors lenders will consider when determining whether or not to give you a loan. So, before you start shopping around for loans, it’s a good idea to check your credit score and find out where you stand. If your score is on the low side, don’t despair—there are still options available to you (more on that in a minute).
2. Shop around for the best interest rate.
Once you know your credit score, you can start shopping around for loans. It’s important to compare rates from multiple lenders so that you can get the best deal possible. And don’t be afraid to negotiate! If you find a better rate from another lender, tell your current lender and see if they’re willing to match it. With such a wide array of lenders available, many are able to service casual or part time workers for those juggling an education and work.
3. Consider a co-signer.
If your credit score is on the low side and you’re having trouble getting approved for a loan with a decent interest rate, consider asking a friend or family member with good credit to co-sign for you. Having a co-signer with good credit will improve your chances of getting approved and could help you get a lower interest rate too. Just make sure you pick someone you trust—if you default on the loan, they’ll be on the hook for it too!
4. Pay attention to fees and other costs.
In addition to interest, there are other costs associated with taking out a car loan that you’ll need to be aware of—such as origination fees, prepayment penalties, etc.—so make sure you ask about those before signing on the dotted line!
5. Read the fine print!
Before signing any loan documents, take some time to read them over carefully so that you understand all of the terms and conditions involved in the agreement. Once you sign those papers, you’re committed to repaying that loan—so make sure you know what you’re getting yourself into!
Getting a car loan as a student may seem daunting, but it’s actually not that different from getting any other type of loan. The first step is to check your credit score so that you have an idea of what interest rate you’ll be offered. Then, compare rates from multiple lenders before choosing one. Once you’ve chosen a lender, get pre-approved for a loan so that you know how much money you have to work with when shopping for a car. Finally, decide how much money you can afford to spend on both the vehicle and associated costs like insurance and gas. By following these steps, buying your first car will be smooth sailing in no time!
