need some advice. (car, college)

[thatoneguy]

I'm a 21 year old college student with no debt. i pay for school with my 2 jobs i have (even though its not much). My mom is a single parent but makes 60k a year and only has money for the bills ect. so she cant really help without hurting herself. i live with her and pay my own bills just no rent. my car blew up on me and will take more to fix it then its worlth. i havent taken out a student loan yet but will come 2012. im looking into getting a car loan for about $3000. will they approve a student loan even if you owe the bank $3000 or should i take out a student loan now and use some of the money for a car? i need a car ASAP as im having my mom drive 120 miles a day to just drop me off go to work and then on break come and pick me up. any ideas?

[disneysteve]

I don't think having the car loan would affect your ability to get the student loan later. Buy the cheap car now and worry about the student loans when the time comes.

[JoshuaHeckathorn]

I agree with DS. The small car loan will in no way hurt your ability to qualify for Federal student loans. In fact, managing the car loan responsibly will only help improve your FICO scores. Get the car since it sounds like you really need it, and then deal with the student loans in 2012.

[clintdavis]

Hey, it's That One Guy! Anyway...I agree with the other replies so far. Don't take the student loans until you actually need them, and do everything you possibly can to use them just for school needs (tuition, books, etc...). While she was in school, my wife and I supplemented our lifestyle with her student loans, and we racked up way more debt than we needed to.

Sell the car for as much as possible, use that money to go toward the purchase of your next car. If at all possible, sell a bunch of stuff or spend a weekend mowing lawns non-stop and try to buy the car in cash. It is definitely in your best interest to stay away from any debt as much as possible, and not let that bear start working its way into your life.

If you absolutely have no choice but to get a loan for the car (and I know you need it ASAP), do everything in your power to pay it off as quickly as possible. Sell stuff, sell blood, work extra hours...keep up with your school work, but get that debt out of your life in a hurry.

You're doing a great job...school and working 2 jobs. Keep it up man!

Thanks for sharing with us!

[dczech09]

Stay away from debt as much as possible, especially a car loan. You are better off having a student loan than a car loan.

Some things to consider:
- Student loans usually carry a low interest rate
- Student loans are NOT dischargeable in bankruptcy; no matter what, you will pay the loans back
- Student loan interest is usually tax deductable; not a reason to take student loans, but it does lower your overall cost
- Student loans do not have any collateral
- Car loans put a lien on your car
- Car loans are not tax deductible

All in all, car loans are really no better than credit cards. It is perfectly legal to take out extra on student loans to buy a car, but be careful with how much you take out extra. If we cannot talk you out of going into debt for a car, then go with the student loan route. If you can get a car without debt, then you will be much better off.

[Frugal]

Usually, getting a car loan will not impact your ability to get Federal Student loans. You might want to check the regulations on the DSL (Direct Student Loans) website at dl.ed.gov. Believe that is the address...

I personally would avoid student loan debt if at ALL possible. I am having a difficult time repaying mine...they take forever, even if you don't owe a lot by some standards.

[steveaz67]

Listen to what dczech09 says. They will hunt you down FOREVER if you cannot pay it back. Trust me. At least keep it in mind.

[jteezie]

Get the federal subsidized student loans
*Buy the car OR move close to school
Graduate college
Repay student loan

I personally think everyone should get every subsidized student loan possible because they are low interest and essentially free money! Why? Lets say you borrow 10k in 2010, when you graduate, you still only owe 10k (but the 10k is worth less due to inflation) while in the meantime, the 10k you borrow, properly invested, is more than 10k by the time you need to repay. Simple arbitrage. I wish I had more SUBSIDIZED student loans.

I think the student loan will be a much better option than getting a car loan. The FICO score "benefits" of having a car loan are the same as having a student loan but costs you way less money.

CAVEAT: I would not necessarily recommend this strategy to everyone, but given your ability to hold 2 jobs and stay independent, I have full faith that at graduation, you will find a reasonable job appropriate per your college education.

Another consideration:
Do a cost-benefit analysis of owning a car vs renting a place near school. Based off your 120 miles a day figure, I assume 40 of those miles are to drive you. At $1/mile (yes, I use this estimate), 3 times a week, 40 weeks a year, that comes out to about $5k a year. Can you find an apartment/room for $400/month? That's the 1st level analysis. Also consider other factors, how much time are you and your mom saving. What is the value of that to both of you? Research shows that driving/commuting = unhappiness. Additionally, I've found that forcing yourself to be even more independent forces you to find ways to support yourself (i.e. find a better job, vs continuing to be a mommy's boy [not saying that you are]).

So, you may find that it makes financially and generally feasible to think outside the box a little.