Most college students have extremely tight budgets due not only to tuition costs, but also the costs of college life: books, meal plans, rent, and – let’s be honest – beverages. After-class jobs and internships can be a great source of income, but they can also be a significant source of stress in and of themselves – especially if you have to rely on public transportation to get back and forth from work. Having a car is ideal of course, but it can be difficult to get approved for financing if you have no credit, minimal income, or no co-signer – many students have all three!
The key to finding an auto loan that will work for your needs is to work with a financial institution that lends to students and understands your unique budget and credit profile. Below you will find several tips that can help you, as a student or parent of a student, find the financing option that suits you best.
Have a Co-signer
If your credit history is nonexistent, but you need a car now, the best thing you can do is get one of your parents to co-sign the loan. In doing so, they will be vouching for you, and you will no longer be such a high-risk applicant in the eyes of the lending institution. Your parents will, in effect, be substituting their credit for your own. Importantly, they will be just as responsible for repayment of the loan as you. Therefore, this is not a responsibility to be taken lightly. If your mother or father is hesitant to co-sign, don’t be angry or alarmed – it is a big commitment that deserves careful consideration.
Build Your Credit
Many lenders – in fact the majority of them – are unwilling to approve car loans for students with no credit, especially if they don’t have a co-signer. As a result, many students simply choose to establish their credit history prior to applying for a loan. One easy way to do so is to open a low-balance credit card. Once the card is open, you can make monthly purchases, and pay the balance off in time to avoid interest charges. Credit card companies report to the credit bureaus, which will in turn build your credit history. However, you MUST be careful not to max out your credit card, as this will impact your credit history in a very negative fashion.
Do Well in School
Lenders want to make sure students are treating their college career like a job. Since most car loans will exceed the student’s part-time income, the financial institution making the loan will want to see that the student is doing well and taking school seriously. The best way a college student can prove they are taking college seriously is to get excellent grades, which will make the student seem like less of a financial risk for the lender. However, as important as they are, a high GPA is seldom a substitute for income, credit, or a cosigner.
The most noteworthy thing a college student can do when seeking a car loan is to keep their expectations in check. While there may be dozens of cars that you would love to have, you should focus on a cheap, reliable, safe car that will meet your needs at the time, which is simply transportation. There will be decades after college for you to purchase the car of your dreams, but for the time being you must simply finance a car that you can afford. Carefully consider the fuel economy of the car, insurance payments, monthly loan payment, registration fees and any parking fees associated with parking on campus.
Following the above steps and working with a financial institution that specializes in auto loans with no credit history will allow a college student to access the transportation they need to be successful and eliminate the hassles associated with public transportation.
Everyday, we help people get approved for no credit car loans, and college students comprise a large segment of our client base. Even without a cosigner, we can get most students financed as long as they have an income of $1200 per month ($300 per week). Are you ready to get started? Just click here to apply online!