There’s no denying that a student is in need of a car. But not every student’s parents are able to afford a car for them, so then it is up to the student themselves to buy, or finance and care for their own car. And, yes, it is possible to for you, as a student, to do this for yourself. You’ll need a few things and you might even need help from other people, but it’s possible for you to afford a car. Start with fixed income If you search hard enough in your immediate area from campus, there will likely be restaurants, bars, stores and service companies that, by now, are used to providing flexible jobs for all the students in the area. Take a look at your timetable for the year and be realistic about where you can fit in a shift or a couple of hours of work in the week. You may need to sacrifice student events and party nights to work but it will be worth it to earn some money, independence and help save towards your car. It’s important to have a fixed income to be able to apply for a student car loan or any loan for that matter. Financial institutions want to know that you can, in fact, afford to pay for the car every month. Once you have a steady job and are successfully balancing student and work life, you need to draw up a budget and figure out what you can realistically afford. Then you can move on to the next step. Check your credit score As a student, with a small income (if any), there isn’t a great chance of you having a credit score just yet. But if you want to ensure a fair interest rate on your car loan, you’re going to need a good credit score. You may not qualify for a credit card right now, but you might be able to open an account at one of your favourite clothing or retail stores. This will be an opportunity to start building credit and lowering your interest rate at which the loan for your car will be set. It works by buying items on credit and paying off your accounts on a monthly basis until the total amount (plus interest) has been paid back. This shows that you are able to make monthly payments and clear your debt, which is the end goal of a loan repayment. And remember, the higher the interest rate, the more you’ll end up paying back to the bank or lender for your car loan and the less affordable it will be to buy a car. Credit scores are important and if you’re struggling with your own, you might need to rely on someone else's, which leads us to your financing options. Consider your financing options Depending on your credit score and income, you might be in a position to take out your own student car loan. If, however, your application is declined due to zero or bad credit, but you’re still able to make payments for a vehicle, there are other options:  
  • Cosigner: A popular option when credit is a problem, is to bring on a cosigner to the loan agreement. Usually, a cosigner is a family member, close friend or someone you trust who has an excellent credit score for you to use. You will still be in charge of making the monthly payments but, if you fail to make a payment or have to pay out the remainder of the loan in full, this will fall to cosigner. They will overtake your payments and their credit score will be affected accordingly. Make sure they have a stable and reliable income to save both their credit history and your neck should you miss a payment. With a cosigner agreement, you are the owner of the car after the final repayment.
  • Co-applicant: Co-applicants are equally responsible for paying back the car loan and, at the end of it, are co-owners of the vehicle. It works as a joint auto loan. Having either a cosigner or co-applicant on your loan application immediately makes it more favourable in the eyes of the lender as they’re more assured of the payments being met when there are at least two people responsible for payments.
  • Other loan options: If you’re still adamant about doing this on your own, you can consider other loan options such as dealer-sponsored loans from the car dealers, credit-union loans, conventional car loans or subprime loans. They may overlook a poor credit score to set your loan at a higher interest which is not ideal but is a self-financing option.
Find a secondhand car deal With the particulars out of the way, you now need to visit the car dealers and dealerships in Gauteng or surrounding areas and find yourself a secondhand car deal. Buying a pre-owned car means you won't have to take out such a large loan and it will be more affordable. Make sure you’ve saved up enough money for a substantial down payment (which will also decrease the loan repayment amount) and consider starting a lift club to help cover your petrol. Because once you’ve bought the car and start paying it off, you’ll need to start covering the on-road expenses as well.

Comments

comments