Financing a Car Loan as a Student: 2 Minute Guide
Financing a Car Loan as a Student: 2 Minute Guide
Posted on April 28, 2023
Are you a student who needs to get around but stuck without a car and short on cash? Don't worry, we've got you covered! While a car may seem like an impossible dream with little money and no credit history, we know how to make it happen.
First things first, you need to generate income, and that means finding a job that suits your skills and schedule. It could be anything from working as a barista to freelancing on online platforms.
Once you start earning, building credit is easier than you might think. We have some great tips and tricks to help you get started, so you can qualify for loans and get that car you've been dreaming of.
So why wait? Let's get you on the road to success!
Click Here to Get Pre-Approved Today!
Student Car Loan Challenges
Aside from finance which we already talked about, the other challenge is lack of credit history. You probably haven’t had much dealing with credit so far and you’ll be largely unknown as far as banks go. For some simple ways to build credit history from nothing, click here.
Put yourself in their shoes. Students aren’t known for fiscal responsibility and if they have nothing else to go on, how are they to know you’re one of the sensible ones?
All lenders have to go on is your credit report. That’s going to be your main challenge and the thing we’ll tackle here.
Get a Credit Card
If you’re over 18, which you’ll need to be to get any type of credit, start with a secured credit card. They take a deposit equal to the credit limit, around $1,000 and provide credit card facilities in return. Here's a list of the best student credit cards in Canada.
Use the credit card for groceries and expenses and pay it off in full each month. If you settle the card every month, you’ll avoid the high interest rates.
If you don’t want to get your own credit card, ask a parent or sibling if you can become an authorized user on theirs. It won’t have the same positive impact on your credit score but it will help a little.
If you know someone willing to trust you enough with a credit card they pay for, it’s a viable option for building credit.
Expect to spend a minimum of a year to 18 months building a positive payment history by regularly using a credit card.
Get a Phone Contract in Your Name
It may be tempting to minimize outgoings with a prepaid phone but going for a contract in your name will also contribute to your payment history. It won’t have the same effect as the credit card but every little helps.
Set up automatic payments and it’s another entry on your credit report lenders can use to assess you.
Save for a Down Payment
While you’re building credit, save for a down payment. We appreciate you won’t have a huge amount of money after living expenses but again, every little helps. Even saving $20-50 a month will make a difference.
While you’re saving, it is also there for emergencies. While it may set your plans for a car back a bit, should anything serious happen, having some savings can genuinely save your skin!
Qualifying for a car loan as a student isn’t easy, even if the steps themselves are. However, it can be done. Then, when you’re ready for a loan, we can help.
If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.