I know how difficult it can be if you’re a student, you’re on a budget (you don’t have a lot of money) and you cannot necessarily verify that you have a job. If you’re a student and you have a part time job, it’s almost absolutely necessary that you have a vehicle that can get you to and from that job. And you want something that’s reliable but still fits into your lifestyle (i.e., your car or truck has to look cool).
Auto Financing 101 has some good info about financing a vehicle if you’re a student. I’ve been in this situation a while back and really wish I had a little bit more information before I bought (leased) my Toyota Corolla back a few years ago.
For college and high school students thinking about buying a car or truck for the new school year, a first step should be obtaining an understanding of how the vehicle financing process
works, according to AWARE (Americans Well-informed on Automobile Retailing Economics), a national consumer education campaign sponsored by members of the vehicle finance industry.
Students may want satellite radio and a GPS system, but that’s often out of financial reach and could very well get a young automobile buyer into economic trouble
“For students who choose to finance their first vehicle, AWARE’s Web site – www.autofinacing101.org – should be ‘required reading,’ because it can help make the difference between a purchasing experience that builds upon long-term financial goals versus one that detracts from them,” said Eric Hoffman of AWARE.
To help students, and their parents navigate the auto financing landscape, AWARE urges students – and their parents – to discuss, and come to an agreement on, the following before buying a car or truck:
• Know what you can afford: Determine what type of vehicle best meets your needs, set a realistic price range, and develop a comprehensive budget for owning and operating your car or truck.
• Decide how you’re going to pay for it: Some first-time car buyers purchase a used car or truck with cash they’ve saved or borrowed from a family member. Others, however, work on their own or with their parents to finance a vehicle through a bank, credit union, or at a dealership.
• Review your credit report: To know what creditors will see, obtain a free copy of your credit report. Plus, this will allow you to correct any errors you find.
• Comparison shop: The auto financing industry is highly competitive, so use the marketplace to your advantage by comparing annual percentage rates and other financing terms from multiple sources, such as banks, credit unions, and auto dealers.
• Know Your Stuff: Make sure you are familiar with common terms you’re likely to hear or read in the course of purchasing or financing a vehicle, such as down payment, fixed- and variable-rate financing, and on- and off-site financing. Many of these terms can be found at www.autofinancing101.org/resources/glossary.asp.
• Negotiate: This finance rate you are offered is negotiable, as well as the price of the vehicle.
• Understand the value and price of optional services: Examples include credit insurance, guaranteed auto protection, and extended service contracts. If you do not want such services, do not sign for them.
• Read any contract carefully before signing it: Ask questions about anything you do not understand.
• Make your payments on time: Late or missed payments incur late fees and can even cause your vehicle to be repossessed, permanently. A bad payment record will also appear on your credit report, damaging your ability to get credit in the future.
AWARE also stresses the importance of distinguishing between wants and needs. “Students may want satellite radio and a GPS system, but that’s often out of financial reach and could very well get a young automobile buyer into economic trouble,” Hoffman said. “Instead, students
should concentrate on financing a safe, reliable car that is
economical to operate, repair, and insure. Understanding these differences is the first step to building a strong credit history for the long term.”
AWARE was formed to build a greater understanding among consumers about how auto financing works. The group aims to ensure that potential buyers of new and used autos have the tools and resources they need to successfully navigate the auto financing process. AWARE focuses exclusively on educating consumers on vehicle financing in a web environment free of advertising or lead generation sales tactics.
For a listing of AWARE’s membership, please visit www.autofinancing101.org.