Auto loans for students are widely available, especially during the time leading up to each annual high school graduation time. Check your local paper, especially the classifieds, for new opportunities on auto loans for students.
These loans are developed specifically for young people who are planning to go to college soon and who need funding to purchase a car.
One of the problems young people and families experience is that the young person is too young to have built up decent credit ratings before they attend college.
There are usually tons of mail with credit offers for young people once they turn 18. But, even if they take some of the proposals for credit cards, they just don’t much time to demonstrate their ability to spend credit wisely. It is also not advisable that young people rack up a big credit card bill before going off to college. They may not be able to make any payments, causing their credit score to plummet before they have a chance to use it.
So, what is the best way to build their credit rating?
By buying a car!
A vehicle purchase is considered a higher level credit event or transaction than getting credit cards. It also doesn’t take as long to get registered in the credit bureaus. As long as they make their car payment on time every month over the first year, it will gradually build a positive credit rating that they can use to apply for other things later such as private student loans or housing loans.
Students should always remember that decisions made early in life often cost us the most. So they should think carefully before taking on additional debt outside of their student loan balance.
However, if students plan to get a new car to commute to school with, this may be a wise and sound financial decision if you are saving money on student housing and meal plans by commuting to school.
No exact method is right for everyone. Everyone has different factors to consider such as the distance to school, whether you plan to work on campus or not, and the difference in cost between student housing and wear and tear on your vehicle.
If you get at least a mid-range car that is going to remain in good condition for a while, it may be a better financial choice to commute to school for at least the first year. The money saved could then be put in an additional fund for college expenses that will be incurred the second year and beyond.