Car Finance as a Student: All You Need to Know
Today’s modern student is a busy one. Whether it be staying away from home in halls of residence, balancing a part-time job with studies or just coming home for Christmas, to the modern student, a car can often be essential.
Having to trust your luck with public transport to make these journeys can add a whole load of stress that can be avoided with a fresh set of wheels.
Can I use my student loan?
Whatever your reason for needing a car as a student, it’s important to know you can’t finance it using your student loan. This is intended to cover your tuition costs and to help with living expenses, even if some of yours did go straight to the local takeaway… So for a car, you’ll need to sort out separate finance if you don’t have a lot of personal savings.
Can any age student get car finance?
If you are a mature student, you are more likely to have a credit history and therefore more likely to get car finance. For the purpose of this article, we will presume you’re a younger student between the age of 18-21.
The good news is, fear less. It’s not impossible! There are other factors than just credit history that lenders take into account when deciding whether to grant a young student car finance. We explain what they are and how you can gain an advantage when applying.
Use the Electoral Roll
One way to give yourself a boost is by getting on the electoral roll. With few exceptions, by law everyone over the age of 16 must register to vote. Their name goes on what is called the electoral roll. If you are a UK resident, the chances are that your parents will have already registered you on the roll and given your home address. The electoral roll helps your case as your credit history and help to confirm the address you give on your loan application.
However, as a student, you can also register at your student address, although you can only vote once. Again, it will help your application if you’re also registered at this second address.
Check Your Credit History
We all have a credit history. When you opened your first bank account, and (hopefully) didn’t go overdrawn you demonstrated credit history. When you took out a mobile phone contract, and a subscription to a music download service or an entertainment channel, your every financial step was recorded, affecting your credit rating. They then use this information to establish your credit worthiness.
My Credit Score isn’t Great, Can I Still Get Car Finance?
You can still apply for car finance with a bad credit score, so it’s not the end of the world if this doesn’t come back as positive as you may have hoped. While we cannot guarantee that any given application will be accepted for car finance through us, many of the lenders we represent specialise in offering car finance deals to applicants with poor credit. Get in touch today to see your best option going forward!
If you have a bad credit record, you may still be able to get access to car finance.
However, you will normally need to search for a lender who is willing to provide financing to people with bad credit records. Not every lender will do this, but there are some that will.
Lenders refer to this rating plus the information (address, salary, employer’s details, and so on) we provide them with when we apply for a loan. They then make the decision to support your application or not.
Time to Budget
Having done the above, now you know what extra money you need to borrow if you are to have a decent used car. Decide on your budget. How much can you afford to pay per month? Do you have any part-time income for example?
Don’t forget to budget for road tax and insurance. It may seem you can afford a particular make or model but depending upon your age, driving history and where you live, this could amount to thousands once you factor in insurance and road tax. Make sure to set some time aside to get insurance quotes, as this could mean the difference between comfortable affording a car and working around causing you extra unwanted stress trying to cover your monthly costs on top of your studies. Insurance costs vary dramatically across different cars, so make sure to get quotes for a range of cars to see which offer the lowest bills – it’s not always the cars you expect.
You must allow for these extra costs when calculating what you need to borrow and whether you can afford to borrow it. You can use our car finance calculator here to get a better understanding of your budget.
So, What Now?
A lot to take in, right?
Once you’ve given yourself the best boost you can, get in touch and we can help you through the rest.
If we didn’t cover what you were looking for, you can email us at info@carfinancegenie.co.uk or see our top ten most frequently asked questions which may cover your query.
