Car loans for students

[wouql]

Here's my question for people: I'm a college student graduating in May, and I've accepted a job offer.

So I've been out shopping for a car loan. There are two different banks near campus who prominently display banners for graduating students to come in and apply for auto loans. They both have identical graduating-student plans if you've accepted a job offer (with an official offer letter) and have good/ok/no credit (NOT bad credit). The nice part? They will let you defer payments on the loan until you officially start your job. Sounds great.

But it hasn't exactly worked out as well as I'd hoped. I applied at one of the banks, with good credit (730), and a good salary offer (~$58k) and was told I was approved for an auto loan of $8,000. (In addition, one of the terms of this plan is you cannot buy a used car - only new.)

Now I'm not looking to buy a Mercedes or anything, but I can't get into much of a car for $8k plus the few Gs I have saved for a DP. So I applied at the other bank, and was even more surprised to discover they apparently think a $7,500 loan ought to be enough (again, this is for new cars only.)

So I've given up on them, since they don't seem to think part of a college-grad program should be lending enough money to actually buy a car. My question is: Does anyone know of any similar online programs for graduating students? The dealerships also have programs, but none of their college grad promotions will let me defer the payments for 6 months, which would let me get a car now. Or, does anyone have any advice for some other way I could defer payments? Or any other advice?

Thanks for any input.

[sweeps]

A search on Google pulled this up:
http://www.commercebank.com/personal...ns/carloan.asp

Be aware that the interest accrues on these loans while they're deferred.

[wouql]

Originally Posted by Sweepsplayer

A search on Google pulled this up:
http://www.commercebank.com/personal...ns/carloan.asp

Be aware that the interest accrues on these loans while they're deferred.

Hahahahahaha.....Commerce Bank IS one of the two lenders I contacted (I go to school in St. Louis - one of only three states Commerce Bank is located).

So thanks, but they're one of the two I struck out on.

[Snoopy2645]

My best advice to you & you can take it or leave is use the few grand you have saved & buy a car you can get a nice used car for a few grand I have done it several times I have never paid more than that for any car. ANd I havent been driving clunkers either.

[ChillPhatCat]

You could try to get a co-signer... haveing no credit is no good, you've got to start somewhere.

[Tree0164]

Originally Posted by Snoopy2645

My best advice to you & you can take it or leave is use the few grand you have saved & buy a car you can get a nice used car for a few grand I have done it several times I have never paid more than that for any car. ANd I havent been driving clunkers either.

Take this advice.. you do not need a brand new car. Buy something use that will get your around. Will help your net worth in the long run alot!

[ChillPhatCat]

On used cars, with a co-signer I bet you could easily get a loan for a used car up to $10k, many banks will loan you money for used cars up to 10 years old... 10k will buy you a loaded luxury car with under 75k if it is truely what you desire, personally I wouldn't spend that much on a car just for Daily driving duty, but that's just me.

[locolorenzo24]

How much do you have saved? Myself, I bought a nice 94 pontiac bonneville with 110 thou on it, and did the needed work to it all for around 4000....not too bad. One cravat, whatever you buy used will probably need some sort of work done to it..............

[wouql]

I didn't mean to turn this into a new-vs.-used debate....

I understand the reasoning that a new car is one of the worst investments you'll ever make. It makes no financial sense to borrow for anything that depreciates that quickly.

That being said, I'm ok with it. I'm young, single, will have a good salary and very low expenses. Even after covering my expenses, maxing out my 401k to company match, and contributing the max for an IRA every month, AND a car payment of $20k for 3 years.....I still have plenty of money I can have fun with or save responsibly. (I'm even planning on using some to pay off the car quickly.)

Is that money I'm spending every month on a car payment being put the absolute best financial use possible? No. But I'm ok with that. It's not imperiling my financial well-being and I'm still saving plenty of money for other things. And it's worth it psychically. I could just buy a beater and get a new one every time I run the old one into the ground. But that wouldn't make me happy. New cars make me happy. (And isn't that why everyone's at this forum? So money doesn't make you unhappy?)

Anyway, didn't mean to get off-topic. My real question was: does anyone have any suggestions for how I could get a car loan now (in January) given that my salary doesn't start until May?

EDIT: I forgot to respond to most in this......I have about $2500 I can use for a down payment. A co-signer is not really an option; I'd have to call up grandparents I haven't seen in a long time, and I'm not certain I feel comfortable asking them to do that for me. I've called some, but I think I might widen my search net for dealerships; thanks Chill

[ChillPhatCat]

Originally Posted by wouql

Anyway, didn't mean to get off-topic. My real question was: does anyone have any suggestions for how I could get a car loan now (in January) given that my salary doesn't start until May?

I'd suggest going to some car dealerships and seeing what kinds of deals they can get you. Honestly a car dealership is going to be trying to get you into that car as much as possible, they're the ones you should be talking to. Some even offer financing themselves.

[abowers]

If you are thinking about a new car, look into the current promotions at dealerships, especially with having good credit.

At Ford, we qualified for the lowest interest rate in October, which was 4.9%, with financing through Ford Motor Company. That was better than any online quote or quote from the bank we belong to. We both just graduated from college in May 2005, so we got a college student rebate of $500 as well. And the nice part about that was all the car and loan paperwork was done in one stop at the dealership, and they took care of everything with getting the car registered, getting plates, etc as well.

You should have no problem getting approved for a loan through the dealership-- I'm making pennies in central NJ as a preschool teacher (probably about $24k/year -- boyfriend is making $27k/year from his grad school stipend) and they approved me for $13,000 of new car loan over 5 years, after putting a few thousand down.

Good luck!

EDIT: With a 730 credit score, you should have no problems with needing to have someone cosign the loan. My boyfriend has a higher score than me (something around 720) and he could have done the loan himself except for that we wanted it to be in my name too.

[Ima saver]

I can understand wanting a new car, the only used vehicle we bought for $10,000 cash lasted for less than a year. The ones we buy new for under 20K lasted 10 years and were still running.
I would suggest you buy a car now from a dealership. Put down as little as possible and use the $2500 in savings to make the first few months payments til you start your job.

[abowers]

In 2002 I did buy a 1995 Ford Contour with only 33k miles on it for $4000 -- which was fine for almost a year when I had to start putting money into it to fix the brakes, the muffler, head gaskets, etc. Then while it was parked on the street outside my apartment in May 2005, some drove into it, and it was totalled. So it lasted almost 3 years anyway.
This was after having driven two other used cars before this.

My boyfriend and I shared his car until October, when we decided it would be better in the long run to get a new car for my next car so we didn't have to worry about being lied to about the history of the car, or having unexpected repairs. Plus, with moving to a new area, we aren't familiar with good garages to take a used car to. With the new car we should be able to expect what maintenance work needs to be done at certain mileage points, and we know the car hasn't been driven roughly, etc.

[wouql]

Thanks to all who replied: I'm posting this here so others who want to know/found-this-thread-on-Google can see my resolution.

The first 3 dealerships I tried I had trouble with securing a loan, so next I went to the banks with college grad programs. Struck out there (see above). When I widened my search net for dealerships (from "within 20 miles" to "within 100 miles" on their website) I found one.

Seems a little strange that the three dealerships near campus had no worthwhile college grad programs to speak of, while one 65 miles away in the middle of nowhere had a great one, but whatever. With a limited but good credit history and a solid job offer in hand, I was approved for a $22,000 at a 6.4% APR.

[Ima saver]

That is great news!! Go for it!!

[Snoopy2645]

Well good for you it seems the dealerships here are the same way the ones out in the middle of nowhere are the big dealerships with the best prices around lots of people from my city go an hour, hour and a half away to buy cars. Good luck to you so what did you buy I would love to get a little newer car here very soon also not sure yet what to get perferablay a van or suv

[Keen]

wouql,

Sorry to be negative but while your movtivations behind wanting a new car are compelling that does not mean they are correct.

As you state "It makes no financial sense to borrow for anything that depreciates that quickly." That is true.

A new car is only new until you drive it off the lot, then its used! I dont care how much extra money you think you are going to have life happens and I would rather have the 60% that a new car drops in value in the first 2-3 years in my bank account. You never know what you might need it for....House, Wife, Baby, etc.

I know I won't talk you out of a new car but I've got to say...Buying a 2-3 year old low milage car from an individual (NOT A DEALER) for cash, for the rest of your days will change your life.

Just my thoughts, good luck with the new jub, I hope you love it.

[abowers]

My concern with buying a low mileage 2-3 year old car from an individual would be -- Why is the individual selling his new car after only having it for 2 - 3 years? If you get it from a dealership you know it's being sold that early because it came off a lease, and you should get some sort of warranty.

I bought a new car in the fall because it will be under warranty for the first 5 years and I don't have to worry about unexpected repairs, as I have had in the past with used cars. I am also planning on driving this car well past when I'm done making the payments.

[Snoopy2645]

I know I always buy used cars because of the depreciation of a brand new car has I always have gotten good cars too. With my dad in the used car business & now my brother I learned how to pick the good cars the last one the one I have now I have had two years & not a single problem its a 99 with over 100k miles now I am looking to trade up not a brand new but little newer maybe 01 or 02. I have never had a car payment in my life & dont plan on starting now.

[Keen]

There are a ton of people out there with car fever...Just have to have that new chevy HHR...Must have it now!! They pay for a new car when the hot new car comes out, then 12-18 months later things change they are low on cash, laid off, insurance is to high, divorce, whatever happens. They go to the dealer to sell that $18,000 car and the dealer offers them $12,000 IF they are going to trade into something else (new or used). When they tell the dealer they don't need another car they just want to sell this one then the offer to buy goes from a bad $12,000 to a laughable $9,000. KBB tells them that dealer retail on the car is $14,000, private party value it $12,500 so they try to sell it themselves for $10-11,000.

So you could buy the one from the dealer that was a trade for $14-15k or buy it from the private party for $10-11k....The only differance the dealer does not make any money when you buy from a private party.

I don't see a time when I will ever buy a car at a dealer...not with the net and other resources that can find the car you want from a private party. The factory warranty still applies no matter who you buy it from...just run a car fax and have the car check by a dealership before you buy.