Certain banks and dealerships offer auto loans and interest rate discounts specifically designed for students.
Students with steady incomes and a sufficient credit history can get auto loans specifically designed for those still in school. To secure the loan, fill out the application form, get preapproved, select your vehicle and finalize the loan.
Consider Your Credit and Income
Before you jump into the auto loan process, understand your credit report and your income. Your credit score can make or break your auto loan application. If your score is too low, you'll get stuck with a high interest rate or you might not get approved at all. Likewise, if you don't have a steady source of income, lenders will be skeptical that you have the funds to cover the monthly payments. Get a free copy of your credit report and evaluate your FICO score. Bankrate notes that individuals with a score above 700 will get the best rates.
Unfortunately, many students haven't had the time to build the credit they need to qualify for an auto loan. If you have a few credit cards and you've been using them responsibly, your credit may suffice. If you score is low and income is erratic, consider asking a family member to cosign on the loan for you.
Find a Lender
Talk to your bank, credit union or car dealership about student auto loan programs and discounts for students. Some lenders, like Commerce Bank, offer auto loans specifically for students. Other financing companies, like GM, offer preferred pricing for current college students and recent grads. You also can visit your school's financial aid center and ask if they have any information about student auto loan programs in the area.
Be prepared to submit documents to the lender that prove your student status. For example, Ford requires students to provide the following information to take advantage of student auto loan offers:
Current class schedule that shows how many classes you're enrolled in.
A dated letter from school confirming enrollment.
Recent transcripts or report cards.
If a new student, a letter of intent to enroll in school.
If recently graduated, a copy of your diploma.
Start the Loan Application Process
Contact your lender start and the loan application process. If you're interested in dealer financing, you'll start the loan process when you're ready to purchase the car. If you want to get a loan through a bank or credit union, you'll need to secure the financing beforehand Either way, be ready to provide copies of recent pay stubs, proof of auto insurance and your Social Security number.
Bankrate recommends that buyers get at least three loan quotes to snag the best interest rate.
Select Your Vehicle and Close the Loan
Once you've been approved for a loan and you're satisfied with the terms, you can select your vehicle and finish the loan process.
If you got preapproval from a bank or credit union, the lender will specify the maximum car purchase price that you qualify for. In this situation, the dealership will provide you with a purchase order with information about the car you want so you can close the loan with your lender. Otherwise, you can finish the financing process directly with the dealer.
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