Getting a car loan
as a college student is often difficult. Between the need for a good credit score, steady income, and a functional debt-to-income ratio, finding a loan with acceptable terms can seem impossible. Luckily, it’s not all doom and gloom. College students have some advantages that other loan applicants don’t, and it’s just a matter of using them to your advantage and being willing to wait for loan terms that suit your needs.
To help you have an easier time getting approved, the car insurance
broker app Jerry
has boiled down everything you need to know about the auto loan approval process. In this article, you’ll find out how car loans work, what advantages college students have, how to get approved for a car loan, and how to find affordable car insurance using our trusted quote comparison app
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How do car loans work?
To get a car loan, you traditionally need to find a lender or bank willing to work with you. They will set the terms of the loan, including the repayment period, interest rate, and monthly payment amount.
It’s very important to remember that most car loans are “secured loans,” meaning the lender has the right to repossess your vehicle if you miss your monthly payment. So, be sure that you’ll have the needed income before agreeing to the terms of an auto loan.
Additionally, lenders will often check your credit score and debt-to-income ratio before approving you for a loan. If you have bad or no credit, it will be more difficult to get a loan and you’ll have higher interest rates.
MORE: 5 reasons you should consider an auto loan from a credit union
Advantages of car loans for college students
While it’s often more difficult to get a car loan as a student, there are some advantages.
Lenders are inclined to take into consideration more than just your credit score, such as your GPA. Along with that, sometimes rebates and discounts are offered to college students—so be sure to ask potential lenders about those.
At the very least, your loan payments will be a chance to begin building your credit score
(so long as you make your payments on time). What makes it hard to get a car loan as a college student?
While it can seem as though lenders discriminate against college students, they have some good reasons for being wary about loaning large sums to this particular cohort:
Low or no credit score—Most students haven’t had the time to build a good credit score through traditional means or haven’t even begun.
Unreliable income—Many students don’t have the time available for a full-time job.
Limited savings—The difficulty of maintaining employment means the chances of any significant savings are fairly slim.
Car loans for college students: How to get one
While it’s difficult to get a car loan as a student, it’s not impossible. Simply follow these steps to give yourself the best chance at getting approved.
Check your credit and finances
The best way to begin finding a car loan is by checking your credit score
. If your score is lackluster or nonexistent, you’ll want to get a copy of your GPA to show potential lenders that you’re responsible. You’ll also want to take stock of your financial situation—mainly your average monthly income and current savings. Ask yourself these questions:
How much of your monthly income can you dedicate to an auto loan payment?
Do you have any savings that can be spent on a larger down payment
? Will you have steady employment for the duration of the loan?
MORE: How to buy a car with bad credit
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Consider a car loan from a credit union
If you have access to a credit union, they may be your best choice. Credit unions are often flexible when compared to other traditional lenders and they are more willing to give car loans for smaller amounts.
Get preapproved before shopping for a car
While it may seem like an extra step in an already drawn-out process, preapproval allows you to shop more easily by knowing exactly what sort of vehicle you can afford and will prevent you from overspending.
MORE: How to save on car insurance with a good student discount
Buy a car with a cosigner
If you don’t have the credit score or grades to get an auto loan, finding a family member or friend who’s willing to apply for the loan with you will drastically increase your chances of getting approved.
Just be aware of the added risk of having a cosigner. If you default on your loan, your cosigner will be stuck repaying it for you or risk damaging their credit—and that can put a strain on your relationship! Be extra sure that you can handle your monthly loan payments before asking someone to cosign on your car loan.
MORE: What’s the difference between a guarantor and co-signer?
Be ready to wait for the best deal
Sometimes you just won’t be able to find the right vehicle in your price range or a car loan with reasonable terms. Be prepared to keep waiting and hunting for the right car and loan. Avoid getting stuck with a vehicle you don’t want or a loan you can’t repay.
MORE: The 10 best cars for students
Key Takeaway For the best odds of getting approved for a car loan, check your credit/finances, try to get preapproved, find a willing cosigner, and be ready to wait for a loan with good terms.
How to find affordable car insurance
Once you find a lender willing to offer you good terms, don’t think that your work is done. Between regular maintenance, routine inspections, and finding the right car insurance policy, owning a car is an ongoing responsibility. Thankfully, Jerry
can take a little more off your plate by finding you the most affordable car insurance available. As a licensed insurance broker
, the Jerry app saves drivers an average of $887 every year. It manages this feat by only providing you with the best quotes from a pool of more than 50 insurance companies. The process is incredibly quick and simple: download the app, fill out a brief questionnaire, and wait for less than two minutes to get your policy choices. If you already have an insurance policy, Jerry can help with that too. Once you find a new policy that better suits your needs, Jerry will help take care of the paperwork to cancel your old coverage. Additionally, Jerry will send you new coverage options every time your policy expires, so the savings can keep growing.
It has never been so simple and easy to find the car insurance you want while saving money, so get Jerry today!
“I’m a college student, and I was struggling to find cheap car insurance. I was just about to buy insurance when I saw the Jerry
ad. It literally saved me over $300 compared to what I would’ve purchased.” —Talia B.
RECOMMENDEDThis app is great, but the customer service is even better! Not to mention convenient! My husband and I got the lowest rate (much lower than the rates I was finding online through my own searches), quickly, and pretty much all through text message! Thank you so much for a hassle free experience👍
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