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If You're Buying a Car as a Student, You Need to Read This

Posted on October 28, 2022

 

Good, you saw the title, that means you’re buying a car as a student. Buying a new car on a student budget can be very hard and stressful, which is why in this article we’re going to go through some of the top tips to make sure you can get the car you need! We hope this helps.

 

Establish A Realistic Budget

 

The first thing you're going to need to do when buying a car as a student in Canada is figure out what you can actually, realistically afford to buy, and unfortunately it’s probably not nearly as nice as you’re hoping for.

 

Part of the student life is not having a whole lot of disposable income, which means your going to have to optimise needs over wants (on that note, make sure you need a car before committing to buying one)

 

 

Write up a budget of all of your finances and take a look at your income vs your expenses, it is possible that in order to make loan payments you may have to cut down on your other spending where possible. Once you have your budget you can limit your search to cars within your set budget.

 

Make a Large Down Payment

 

If a loan is required for a purchase, you're going to want to make as big a down payment as possible, in fact if you’re even thinking about getting a car then you should start saving as much as you can starting now. 

 

The reason for this is that as a student with little to no credit history, you’re more than likely going to get saddled with an extremely high interest rate. However, interest is only applied to the cost of the car after subtracting the down payment. That means that the bigger you can make that down payment, the less money you’ll need to pay overall.

 

 

Find A Loan Co-signer 

 

One of the best things you can do when buying a car as a student, especially if this will be your first ever car purchase or loan, is to get yourself a co-signer. A co-signer is quite simply someone who signs the loan agreement alongside you, meaning that If you default on the loan they agree to take on the repayment instead.

 

Parents are the primary option for this, since it needs to be someone who trusts you not to dump a load of debt on them. The benefit of a co-signer is that lenders like them because they mitigate risk, without a credit history you are an unknown, and as such considered a risk. However, a co-signer with a good credit history is an insurance for them that the loan will be repaid no matter what, and as such you’ll get a lower interest rate.

 

Click here to get approved for your next car loan online today! We have a team of credit specialists ready to help you get approved for a great priced car loan, and will work with you no matter your credit score.