Nothing about traveling is fun if you’re commuting on public transport because of the traffic and time wasted waiting for one to arrive.
Because of this, most students prefer commuting to college in their own car, especially those living in faraway locations or working part-time to meet their expenses. If you, too, find it difficult to commute to work and school on public transport, you must have thought of purchasing a car.
With car prices skyrocketing, owning a car is beyond the means of the majority of students. In such pressing times, a practical solution is taking out a car loan from a reliable lender.
When it comes to car loans, your credit score must be good, and your income should be steady.
Taking into account the two criteria, you must be thinking that securing a car loan with a bad credit score is impossible. However, that’s not the case.
Several car dealers and a vast network of lenders are ready to offer car loans to students, including college grads, high school graduates, and international students.
Read this guide till the end to learn more about how to secure a student car loan with a bad credit score.
Students have a lot of financial responsibilities on their shoulders, from paying college fees to basic living expenses. And let’s be honest, maintaining a good credit score is quite a challenge.
On the other hand, the majority of lenders do not offer loans to students with bad credit histories to safeguard their interests and themselves. That’s because no lender would lend money to individuals who have struggled to repay debts or make payments on credit cards previously.
That said, here are a few reasons you may be struggling to secure car loans as a student:
Among lenders, credit history is the most important factor when deciding if applicants qualify for loans. Individuals who have never taken a loan or had a credit card lack history on the basis of which the banks or lenders ascertain whether you’ll be able to repay a loan or not.
Moreover, student loans have no impact on your credit score until you graduate and start repaying them. Despite that, you may still qualify for a car loan with poor or no credit but at a higher interest rate.
Nevertheless, getting in touch with reliable lenders will give you a clear picture of the interest rate you need to pay each month for student car loans. Some students rely on KoraDrive, which offers car loans to both national and international college students and graduates to buy cars for college.
In as little as 24 hours, the financial institution is said to approve loans for students without evaluating their credit history or requiring a co-signer.
Employment history is another significant factor that lenders evaluate when applications are made for loans. Lenders review the job details to determine if the applicant will be able to repay the loan.
Students with low income must assure the lender that they intend to stay in their current job for long if they wish to secure a car loan.
At times, lenders may decide to lend only a small sum of money to students for purchasing a vehicle. As a result, students are faced with limited options and may have to buy cars that fall within the loan maximum.
Not qualifying for a student car loan is surely disappointing, but that doesn’t mean you should give up on your dream of buying a car. Here we’ve mentioned a few tips which could possibly help you improve your credit score and secure an auto loan:
1. Bring a relative or a friend as a co-signer who can serve as a co-borrower so that you can secure a loan.
2. Try to become an authorized user of your friends’ or parents’ credit cards, as their financial habits will help you secure a loan.
3. Work hard to improve your bad credit score by clearing outstanding debts. Also, lower your credit card limit, so you can show yourself a responsible borrower by paying off the balance every month
4. Save as much money as you can for a down payment.
5. Earn good grades and try to secure a decent-paying job to convince lenders to consider you for an auto loan.
Sure, securing a car loan is challenging for young adults with not much credit history, but it isn’t impossible.
Quite a few lenders understand the challenges students face, especially those working alongside studying. Therefore, they offer unique loan programs that align with their financial capacity.
All you need to do is find them from among the sea of options. And just like that, commuting to school won’t be troublesome anymore.