3 Auto Loan Tips For College Students
Buying your first car during your college years can be a challenge. Money is often tight, and you may have no significant credit history. This can make getting a great deal on auto loans in your area difficult. However, reliable transportation is important, especially if you live off-campus or if you're working and going to school at the same time. Take a look at some tips that can help you get the best first auto loan out there.
Make The Biggest Down Payment You Can
Dealerships may draw you in with the promise of no-money-down auto loans, but read the fine print: there's usually a minimum credit score that you need to meet to qualify. If you've never had to make payments on anything before, your lack of a credit history can work against you. Plus, no-money-down loans often come with higher interest rates and finance charges.
The more you can save up for a down payment, the better. The average down payment is around 10.4% of the car's value, although experts recommend putting down 20%. The higher the down payment, the more room you'll have to negotiate lower interest rates and lower payments. You may have to tighten your belt for
Shop Around For A Loan
Don't feel like you're stuck with dealer financing. You want as many options to choose from as possible, so take the time to shop around for an auto loan. If you already have a relationship with a bank, try there first. You might also want to see whether there's a student credit union that you can join – credit unions often offer lower rates than banks.
You can even try searching for online lenders. Because online lenders work on a large scale, they stand a good chance of being able to find you a low rate. Everybody's situation is different, so there's no one right answer when it comes to choosing a lender. Check out a variety and then make the best choice for you.
Figure Out Driving Expenses Before You Sign
Settling on a car payment is just the beginning. It costs money to insure your car and keep it running, and you want to make sure that you can afford the ongoing expenses in addition to the monthly car loan.
Many lenders will require you to get full coverage on your car until the loan is paid off, so get some auto insurance quotes on the car you want before you agree to a loan – if you can't afford the monthly loan payment and the monthly insurance bill at the same time, you need to bring one or the other of those costs down before you sign on the dotted line. Be sure to also factor in the costs of fuel and vehicle maintenance as well.
Finding the right auto loan may require some patience and research, but it's worth it to end up with affordable wheels that won't leave you stranded. Don't be afraid to take your time finding the right loan for you.