There are so many reasons why students at university may need a car to get around! Whether you’re traveling to lectures, going to and from your part-time job, or visiting family and friends, having a car can be really beneficial! But with limited income and little credit history, can many students get a car for university? Many students choose to get a car through savings or spread the cost of getting a car by taking out car finance. There are a number of lenders who will consider students for car finance but there are also a number of factors that can help you get the best deal possible!
How to fund your first car
There are a number of ways that students and young people choose to fund their first car.
- Car finance. Car finance for students can be a great way to help spread the cost of owning a car. It can be really beneficial when you have a small amount of income or a student loan. However, some finance lenders may be worried that you can’t pay back your finance if you have too little income.
- Savings. Buying a car with cash or savings can be the most cost-effective way to get a car but you may want to save some for a rainy day or use the money to help with your studies.
- Student loan. A student loan can be used to help get a car but really your student loan should be used to help with tuition costs and living expenses. You could however consider using part of your student loan as a deposit for car finance to help make getting a car more affordable.
Why students may struggle to get car finance:
As mentioned, it can be possible for university students to get approved for car finance but there are a few factors which may hold them back.
- Lack of income. Having little or no additional income can be tricky. Lenders want to know how you will pay your loan back and with what money. Usually, car finance lenders like to see steady income from a permanent or part time job.
- Lack of credit history. No credit car finance can be possible but having no credit means lenders don’t know what type of borrower you are. In many cases, establishing a credit history can be key to getting approved for car finance and also a better deal.
How to get a car on finance as a student:
If you are looking to go down the car finance route, it can be a great way to get the car you want and help spread the cost! However, there’s no such thing as guaranteed car finance and each lender’s criteria is different. There are a number of ways in which you can help improve your chances of student car finance approval.
- Get a part time job. Many finance lenders have a minimum income amount before they would approve you for finance. This is because they want to see how you could afford to pay your loan back. It can be hard to work and study but even having a part time job can help you to get accepted.
- Increase your credit score. Having a better credit score can give you access to better finance rates. Meeting your repayment deadlines on time and in full each month can help to increase your score. You could also consider clearing any existing debt first before you apply for finance as this can affect your chances of getting approved.
- Build a credit history. If you are looking to get finance but have no credit history, it can be tricky. However, you could consider building a credit history before you start applying for finance. This can be as easy as taking out a mobile phone contract in your name and meeting the repayment on time and in full each month. Alternatively, you could consider a credit building credit card for students which you use to make small purchases on each month and then pay it back in full.