Compare Colleges Find Scholarships Financial Literacy College Pulse

Categorized | Financial Literacy

What to Know When Buying A Car In College

SmartCarCollege students need to get around just like everyone else. Unfortunately, few of them have enough money to buy new cars without sacrificing necessities like food and lodging. If you want to buy a car while in college, you’ll need to know a few things to get a good deal on a reliable vehicle.

Set a Firm Budget Before You Start Shopping

Since college students usually don’t have much money, it’s important to set a firm budget before you even start exploring your options. If you know that you can afford to spend $400 a month, then only look at cars that cost $400 or less per month. If you plan to buy a car with cash (good for you!), consider that you’ll have to pay taxes and fees on top of the vehicle’s price. Include extra expenses so you know which cars really match your budget.

You may face difficult financial decisions if you exceed your budget. You really could find yourself choosing between this month’s rent and this month’s car payment. Don’t put yourself in that kind of situation.

The Less You Borrow, the Less You Repay

A lot of people use auto loans so they can afford to buy cars. If you don’t have much money saved, this is probably your only option. Unfortunately, borrowing money increases the overall cost of purchasing the vehicle.

Let’s say used cars on are listed at $8,000. You have $1,000 for a down payment, so you need to borrow $7,000. If you get a three-year loan with 4.7 percent interest, you’ll repay the lender over $7,500.

$500 is a lot of money when you’re trying to buy a car on a tight budget.

You can often lower the repayment amount by making a larger down payment, negotiating for a lower interest rate, or choosing a short-term loan that you repay in a year or two.

Know How Much it Costs to Own the Car

Buying a car means having to take on new financial responsibilities. According to some research, it costs the average person $8,876 to own and drive a sedan. You’ll have to pay for fuel, oil changes, maintenance, repairs, insurance, and taxes.

Some cars cost a lot more to own than others. As a broke college student, you should find an inexpensive car that doesn’t cost a lot to own. Look for fuel efficient cars so you can save money on gas. Also, contact auto insurance companies to compare rates for different cars. You might find that you can save hundreds or thousands of dollars just by choosing one car over another.

Looks are Less Important Than Functionality

Nearly all drivers prefer cars that look nice. Those used vehicles, however, usually cost more than those that show their age. Since you don’t have a lot of money to spend, you should focus on what’s really important. You need a car that performs well. Aesthetics come in at a distant second place. Since there are people who will try to charge high prices for fancy cars with mechanical problems, you need to get as much information about the vehicle as possible.

Have a certified mechanic inspect the used car for signs of damage. If the mechanic finds problems, then you may want to choose another car that’s more reliable. If it gets a clean bill of health, then keep that car on your list.

Buyers should request maintenance records so they have evidence that the car’s owner cared for it. If the seller has receipts showing that the car got regular oil changes, then you know the previous owner took care of it. Buyers should also request the car’s license plate and vehicle identification numbers. You can use these numbers to get a vehicle history report that includes information from insurance companies and DMV offices. If the car has been in several accidents or disasters, the report should list that information.

Having a car in college makes it a lot easier to commute, visit family, and get away from campus when deadlines start stressing everyone out. What advice would you give college students who need to follow a strict budget when buying cars?

RSS Subscribe Did you like this article? You can get all the latest articles sent to you by entering your email address in the box below and clicking "Subscribe." Your email will only be used for this subscription and you can unsubscribe at any time. You can also Follow Us on Twitter!

Comments are closed.