Ways Students Can More Easily Get Qualified for an Auto Loan
Students typically face a lot of challenges when shopping for a car. These young adults typically have little or no credit history. Also, many students don’t have jobs as they are studying for school full-time. Will this student pay on time? Can this student afford the car in the first place? Due to these risks from the lenders’ perspectives, students are likely going to have more difficulty qualifying for a car loan. Full-time students can get a car loan, however, if the proper effort is taken to minimize those financial risks for the lenders. Here are a few ways you can more easily get qualified for an auto loan as a student.
[ READ MORE: How Much Should My Down Payment on a Car Be? ]
How to Increase Your Chances of Getting a Car Loan as a Student
Start Building Credit
Credit is the very first thing lenders will review for any loan applicant. Consider getting a credit card and charging your normal purchases on it. Make payments on time to begin building your credit reputation. The sooner you start building credit, the better off you will be.
Maintain a Good GPA
Many lenders will reward students that maintain a good GPA with discounts and even cash back rewards. We recommend maintaining at least a “B” average or 3.0 GPA.
Hold a Secure Job
Your chances of getting accepted by a lender will drastically decrease if you cannot afford to pay the loan back. Getting a secure job and holding it will prove that you can afford the investment.
Save for a Down Payment
Saving for a down payment will show lenders that you don’t need to borrow the full amount of the purchase and that you are committed to paying off the car. In addition, it will help you save money on interest in the long run. Some lenders will require a down payment at signing, often up to 20%, so you should start saving early.
Consider Cosigning with a Parent
If all else fails, consider cosigning with a parent. A cosigner will be liable to foot the bill if you are unable to pay. However, this will require a serious conversation as their credit will also be at stake if payments are late or missed. This option is only recommended if you fully trust your cosigner and your cosigner fully trusts you.
Even if you have no credit, we are available to help you find a car loan that is right for your budget. To get pre-qualified, simply complete our online application. If you have any questions about the pre-qualification process, contact the U.S. Auto Sales team here.