September rolls around, the leaves start falling, you just paid hundreds of dollars for a set of books, have no idea what you want to major in (Can you major in “Undecided?”), and just found your way around the busy campus. It is the first time away from the family, and you have to support yourself. You also need a vehicle to commute to class or to explore this new town that you will call home for the next four years. So how do you make this happen? A car loan is a great option to help you purchase a car or truck. Here are some tips from CarFinance.com for first-time buyers, or students, just like you
1) Check your credit score. Most likely, due to your age, you will have limited credit history. Unfortunately, having no credit is not promising to the lenders and increases your chances of being denied a car loan. Order your credit report for FREE (a college student’s dream!) to see where your credit standing is. If your parents opened a bank account for you at a young age, you may have a higher credit score than you think. Plus, you still need to check for any inaccuracies that could pull your credit score down.

2) Build you credit. Once you received your credit report, highlighted and contested all errors, you may find out you have very little credit. Or, you may receive your credit report and realize there is nothing actually on it. Don’t get discouraged, you still have some options. The first option is to start building up credit by opening credit card accounts. Don’t open too many, just enough that you can comfortably afford to pay off and to pay on time. Paying on time is essential in building good credit. Another option, if you need the car right away, is to co-borrow the car loan with a parent. Remember to put it under your name with the co-borrower being your parent; that way you build up your own credit, not your parents. Now, this is a tricky situation—if you can’t pay your car loan or you default the car loan (some fancy terminology for you), the co-borrower is responsible to pay those defaulted payments. If the co-borrower does not pay, then the car is repossessed and both you and your parent suffer the consequences on your credit score. Meaning, you could potentially take your parents down with you. And honestly, haven’t they done enough? They clothed, fed, and bathed you through the years. Be responsible and help them out by not signing into a car loan you don’t believe you can pay.

3) Calculate all costs. To avoid getting into a too pricey car loan, remember to consider all your costs. You will be responsible for the new car loan monthly payments, the interest, sales tax, the maintenance, any repair costs, gas, and insurance fees. To get a better idea of how much you can afford, start a budgeting list with estimated costs accounted for as well as an emergency fund for any unsuspected repairs.

4) Think about purchasing a used car. Although used cars have a bigger risk of needing more frequent repairs, they come with a smaller sticker price and more car than new vehicles. It may be your best bet to go the used car route. For more information about used cars, read our “The Best Used Car Loans Out There for You” article.

5) Apply for a car loan before you get to the dealership. CarFinance.com offers you the chance to see ahead of time if you will be approved for a car loan. Many times at the car lot, you will be bombarded with information, car financing, questions, etc. If you get your car financing done beforehand, you will be able to concentrate at the task at hand—finding the right car for you.

6) Shop smart for insurance. Unfortunately, your age will influence your insurance costs. Expect to pay higher monthly or yearly payments, since you are at a risk to insurance companies. Also, to help lessen the payments look to purchasing a four-door car, rather than a two-door. Many two-door vehicles can be categorized as sport vehicles, which means to the insurance company that you, a young adult, are more likely to speed, increasing your risk to get into a car accident. Even though you are a responsible individual, insurance companies will consider you a high liability. It is in your best interest to cut costs by keeping away from sport vehicles. Ask the dealer or insurance agent what the car category is if at any time you are unsure. Just like the college experience, purchasing your first car is exciting and memorable. Choose wisely with the best car loan, since this will be the vehicle you will be driving to go back home for mother’s Thanksgiving apple pie, or to your friend’s semi-responsible (hey, we were in college once too!) after-finals party, or to your dorm to show your roommate how you set the curve in biology.