College students have to work around a modest budget to keep the lights on and food on the table. If they still have money left over, they may be able to afford a car if they do the following.
1. Buy a Used Car From a Third-Party
While it’s true that the best cars on the market are new, full of technology, and more likely to be road-worthy than a used vehicle, you probably can’t afford the latest model. What’s more, pre-owned cars cost less to run than newer models, cutting down your costs even further.
You’ll also pay less sales tax and lower insurance rates. If you’re lucky, you may find a car with some interesting technology, innovative features, or performance enhancements. But if you’re getting a car from a third party, make sure you test-drive it around the block before you buy.
2. Look Into Brand-Specific Financing
Financing a car means taking out a car loan you’ll repay over time. Drivers usually get a loan if they can’t afford to buy a vehicle outright. If your heart is set on a new car, start comparing loans from lenders, like banks, or dealerships, as they have plenty of great financing options.
For example, Honda Financial Services provides car loans for borrowers who want a new, used, or CPO Honda. Interest rates are usually lower when you purchase a loan or lease from a dealership, and you can get pre-approved quickly through the Honda finance department.
3. Start Saving for a Vehicle Early
It’s difficult to become financially independent as a college student, but not impossible if you have a saving mindset. Maybe you won’t be able to buy a car in your first year, but if you save your pennies, you could be driving by your second. Create a budget to see what you can afford.
As a rule, 20% of your income should go towards transportation, but this doesn’t include insurance and registration costs. Leave an extra 2% to 3% for that expense. If you have 20% left over after you’ve paid for food, shelter, debts, and entertainment, you can purchase a car.
4. Up Your Credit Score or Get a Co-Signer
When you’re buying a car for college, a good credit score (700 or higher) can get you approved for better finance rates. Your payment history and used credit vs. available credit amount account for 65% of your overall score, so pay your bills on time and get rid of your debt.
Unfortunately, most college students don’t have a credit score, and building one up takes time. If you can find a co-signer, like one of your family members, they can give you the boost you need to get approved for a loan. With that said, they need to have exceptional credit to be a co-signer.
5. Secure a Steady Job or Income
Working while you’re in college isn’t ideal, but many students have to do it to survive. A steady income is a must if you’re paying for your own car insurance. To even get a loan, you need a job, as it indicates you’re reliable. You can find a job on or off campus, full-time or part-time.
Check your college’s career center for job openings, or look online for some freelancing or gig work. If you’re in your second year, you could sign up for a paid internship. Paid internships are the best option because you gain real-world experience that could help you enter the workforce.
