Many American universities are promoting car-free campuses by offering free bikes to students and charging hefty fees for parking permits. But, if your university has inadequate student housing facilities and limited public transportation service, you need a car to attend your classes.
When you decide to buy a car, you have to undertake the process of auto financing. It is because most of us don’t have enough spare cash to buy a car. Students are overwhelmed by the very thought of auto loans because they are buying a car for the first time and they don’t know much about it. But, if you understand the following factors that are considered by lenders, you will realize that getting approval on student auto loan is easy as ABC.
A for Approval Criteria
Even though lenders have different approval criteria, few things remain common like:
1. You must have a Valid Social Security Number
2. You must be minimum 18 Years of Age
3. You must possess a Certificate of Enrollment(Proof that you are a Student of University)
4. You should earn Regular Income (Part-Time Job is Acceptable)
5. You should have Employment Proof (Employment Verification Letter is Satisfactory)
B for Budget
You must prepare a budget before starting your car shopping. It will enable you to narrow down your list of favorite cars. Once you know your affordability, it will be easy to choose the best-in-your-range car model.
So, list down all your monthly expenses and income along with any allowance that you receive from your parents. Calculate the amount of money that you can spare for monthly payments. It will help you in selecting the ideal student car loan program.
C for Co-Signer
Anyone can be a co-signer as long as he/she has a good credit score and lower debt-to-income ratio. If your parents have lower debt and can manage the responsibility of your car loan, you can ask them to co-sign your student auto loan contract. Don’t worry if your parents stay in another state. Most lenders don’t have a problem with an out-of-state co-signer.
D for Down Payment
The down payment amount is helpful in reducing your loan amount and projecting a stable financial situation to the lender. But, most students don’t have enough cash to make down payment. So, you can ask your employer for an advance or convince your parents to lend you some money. You can even ask your parents to sell their old car to generate money. Trading the old car can also be an option for lowering the loan amount.
So, these are the factors that can help you in passing the test of student car loan with flying colors. Use them and get ready for easy auto loan approval.