When you are staying in a different city for education purposes, there are chances that you want to buy a car for yourself. A car makes it easy for you to commute from the university and also helps you to drive back home without the hassle of buying tickets. It is difficult for you as a student to fund the whole amount for the car; therefore, you can always apply for car loans. Given below are five steps that you can take to get a good car loan for your new car-
- Open Bank Accounts
When you apply for a car loan you have to show the lenders that you are a mature borrower. This means that you have made arrangements to increase and secure your savings. You can open a checking and a savings account and start saving some amount in them. Also keep your bank-statement clean to show that you do not overdraw and is consistent in saving and managing your finances.
- Take Control of your Credit
The first thing that lenders see when you apply for a car loan is your credit chart. This chart helps them determine how well you are as a borrower and whether there are chances of your becoming a defaulter. You should always build a good credit history if you ever plan to take a loan. Students in most cases become defaulters, so build a good credit history to prove the lenders otherwise.
- Provide Clear Background Information
As a student when you apply for a car loan, you have to provide valid documents to prove that you are enrolled at a certain college. It helps if you borrow the car loans from the lender your parents deal with. This ensures that they have a known guarantor and you can show them a good credit history of your family.
- Co-sign with Parents
Lenders are always apprehensive about the defaults and they are very uncertain when students apply for loans. If you feel that your credit history is not good and you might not be eligible for a student car loan on the basis of your bank records, then you can always co-sign with parents. This move makes the lenders believe that in case you can’t pay the loan, your parents can pay the money,
- Be Truthful with the Lender
Be truthful when you tell the lender about your income and expenditure. You are a student who is on a shoe string budget. When you are truthful with the lender, you can avoid unnecessary loan burden. Being honest in your dealings and providing transparent papers helps the lender develop a faith it you and helps to get approval. If you can, get some added benefits for the loan since you are a student.
You are on a tight budget as a student. You have additional expenses after buying the car. Take this into account when you settle your monthly interest and loan repayment amount.