Many young people buy their first car while in college. Sometimes, driving your own car is a more viable option rather than move in to a boarding home near the campus. Do you need to get a car? If so, consider the following tips on how you can get approved for a student car loan.
Be prepared for the responsibilities. Acquiring a car loan from a bank or lending company is a serious responsibility. If you fail to keep up with the lender’s repayment terms, you could be subjected to pay penalty fees. Needless to say, you want to avoid falling into bad debt because you weren’t able to make your car loan payments on time.
Compare car loan deals. The thought of owning a car can be exciting but don’t go rushing into a deal without doing your homework. Be ready to spend time and effort comparing car loans from different sources. Aside from banks and commercial lending companies, don’t forget to consider credit unions as these organizations are most likely to offer financing with low rates and flexible terms of repayment.
Calculate your monthly loan payments. It might be tempting to buy an expensive car but ask yourself, can you afford the monthly loan payments? When comparing car loan deals, use loan calculators from the lender’s website so you can have a better idea how much the monthly cost will be. Of course, the interest rate will depend on a number of factors, and you should look for ways to qualify for a lower rate to reduce your monthly loan fees.
Get a co-signer. Students usually lack credit history to qualify for a better loan deal. One way to get a lower car loan rate is to get a co-signer with impressive credit rating. Don’t forget that co-signing another person’s loan is a big responsibility since the co-signer agrees to take over the car loan repayment if the original borrower defaults. Therefore, your co-signer should be aware of the possible consequences and must be willing to guarantee the car loan on your behalf.
Take care of your grades. College students with impressive academic rating are often regarded as responsible adults. Your car loan lender is more likely to give you a lower rate if you have excellent grades in most or all your subjects.
Drive safely. As soon as you get approved for a car loan, avoid any records of road violations and accidents. If you can maintain a clean driving record, you can ask your car loan lender for a lower interest rate after six months or a year of consistent payment.
Maintain good credit. Make sure that your chosen car loan lender reports your payments to the three major credit bureaus. Submit your car loan payments on time. By doing so, your car loan lender will be able to see that you are credit worthy and thus, deserving of a low rate.
Negotiate for a better deal. It is always worth the try to ask for a lower interest rate or a better loan deal when dealing with a lender. Know your own strengths as a customer and use them to your advantage.
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