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Car Loans for College Students - What Determines the Price You Pay

By Edited Nov 13, 2013 0 0

Being a student is hard enough and the last thing you want to do is worry about money and how you are going to afford everything you need or want. A car is a useful asset to have to get around and enjoy college life but it can be expensive. You may think of getting a part time job or borrowing from your folks but if you don’t like these ideas then there are always car loans for college students. Before you settle on one it is important to know just what will make up the price you pay.

The type of car you buy
When it comes to car loans for college students the pricier the car the bigger the loan and the bigger the installment. Many college students will want to go for the latest and most popular new cars but taking out a loan for that amount of money would be financial suicide, and it would take years and years to pay off. You don’t want to end up in that much debt before you even have a real job. On the other hand if you get a relatively cheap car you could take out a lower loan amount and have lower installments for a shorter period of time.

The loan period
Some people prefer to pay in the shortest time possible so as not to incur as much interest when looking at the cumulative sum of how much they pay back. Then there are those who prefer the longer loan periods because that means lower monthly rates, however the total amount is bigger at the end of the loan period. A good idea would be to work out a budget and see how much you can afford so you can find a rate and loan period to suit you. You can use a loan calculator to assist you.

Your credit history
When it comes to loans the first thing a lender will look at is your credit history. This will be used to show them whether you can be trusted to give them their money back. If you have a bad credit history then most lenders will not grant you the loan. Then there are lenders who are just out to make a profit so they will charge exorbitant fees and rates to the point you may even end up paying twice as much as the original loan amount.



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