Having a car in college is often a necessity after a few years. Many students want to reward themselves for their studies with a new car. Unfortunately, millions of students graduate with student loan debt, and the cost of college keeps increasing, which makes it hard for students to afford a big purchase. But, car dealerships and other programs are making it easier for college students to save money on their first car.
There are several ways to save money on your first car. These include shopping around for insurance, finding a college incentive program through a dealership, choosing an economically-friendly vehicle, and more. Let’s look at some of the best ways to save money on your first car.
How College Students Can Save Money on their First Car
If you’re in college, you hopefully know not to exceed your budget when buying a car. With that being said, it may be tempting to want to buy that flashy sports car or get top-of-the-line features. But by shopping smart and finding a car that is affordable to drive and maintain, you can save yourself money now and in the future.
When deciding on what car to buy, first calculate your desired car payment using an auto loan payment calculator. Many financial experts suggest that your car payment shouldn’t be more than 15% of your pre-tax monthly pay. You will also have to save for the down payment. While you can put down less money for the down payment, the less you put down, the higher the payment.
Find a Competitive Interest Rate
While financing directly through the dealership may be the easiest option, it’s not always the most competitive. Car dealerships base their interest rate on many factors. These factors include the current market, how many cars they have to sell, your credit score, and more. You’re going to have to pay an interest rate no matter what, but you may be able to find a lower rate elsewhere. Try local credit unions or banks, as these institutions often have deals to get you in the door. Since college students may lack credit, consider having a co-signer to help secure a manageable rate.
Find a Program to Help
Many car dealerships offer incentives to college students and recent graduates to make it easier to buy a car. Often, these deals mean a lower down payment, a competitive interest rate, no co-signer requirement, and lower credit requirements. Because college students likely haven’t built their credit, it can be hard to qualify for loans like an auto loan. These programs help solve this.
To qualify for college graduate programs, most students will need to provide proof of college graduation, proof of employment, and your credit history.
Shop Around for Insurance
Insurance is a major financial expense to consider when buying or leasing a car, but with proper research, you can find a rate that’s lower than you might expect. Some insurance companies offer good driver discounts, low-income discounts, low mileage discounts and, yes, good student discounts! Insurance.Com does a great job of consolidating all these factors into one guide to help you save money on insurance.
Buying a car is a big step in an adult’s life, and while it’s a significant purchase, it doesn’t have to break the bank. By following these steps, college students can save money on their first car and show responsible debt management skills.
Author’s Bio: Trevor McDonald is a freelance content writer who has a passion for writing. He’s written a variety of education, travel, health, and lifestyle articles for many different companies and is currently writing for Volvo Mall of Georgia. You can find him running with his dog, playing his guitar or outside enjoying about any type of fitness activity imaginable.