The Student Car Loan: Great Deal, or Hype and Hoax?

Okay, time to study. So naturally, student car loan ads catch your eye. You need to get around – and the local dealership advertises a cool car with financing. How convenient is that! Those guys really want to help students. What a great idea. Can you feel the sarcasm?

Necessary Evils

Yeah, I admit, going to school without a car stinks. I tried it for a semester, but then, I got lucky. My friend ran into a house! No joke, right through the living room wall, with my girlfriend in the car. The car was totaled, and my friend’s dad asked if I wanted to buy it.

NOTICE: Both girls and the residents of the home were okay - No one was injured seriously in the making of this true story. And I was joking about getting lucky - our relationship didn't last either!

I bought what was left of the car and fixed it up, with a little help from my dad. Well, a lot of help. It ran for several more years after that. It was cheap, had pretty good gas mileage, and I knew a few things about cars.

Here's the best part - No student car loan included!

The problem is, for many students, you may not know a fuel filter from a head gasket, and that can really cause some problems. You just want a car that will run and take you to school and back. And to Starbucks. And home sometimes. Not so much to ask, right?

Reliable Transportation

If you are going to have a car, you need a reliable one, especially if you can’t fix it, but even if you can. I don't know anyone who wants to fix their car constantly. Hey, I’ve been stranded before, and there just isn’t that much to do in Lovelock, NV for 3 days. No, I'm not even kidding.

NOTICE: No one in Lovelock was harmed in the making of yet another true story about car trouble. We even bought food, and car parts, too.

The Used Car Challenge: Private or Dealer?

I made a mistake. While in college, I bought a car for $600 that I thought I could fix. After buying the car, I found out a major piece was missing, and very expensive. I could drive it for a little while, but I couldn’t get it licensed. And I signed one of those As-Is statements.

When I bought it, I knew it had some problems, but missing parts? I should have gone with a car I knew was in good condition. I could even have had a mechanic check it out. Instead, I drove it to another state and when i got sick of dealing with it, I  sold it to a car recycler – a junk yard – for $200.

If you reread those last two paragraphs, you’ll find a nifty way to lose $400 cash, while at the same time driving a crappy car. Fun, right?

To get a reliable car, though, you don’t have to go deep into debt with a dealer and a student car loan. I know, that’s not what the dealership tells you, but it’s true. You can buy a great car for $3,500-6,000 that will run for several years with regular maintenance. I originally wrote this in late 2008 – and I reviewed it in 2015, and I stand by that price range. You can get a car from a private individual that runs well. You can also find some deals with car dealers – this isn’t the most important decision.

See the next section for the real choice.

Your Choice: Student Car Loan or Cash?

Now you can make a better decision: borrow or pay cash. You need money to pay tuition, lab fees, your college textbooks, rent, and so on. And you probably still like to eat a couple of times a day. I'm saying you have expenses.

If you select carefully, you can buy a good used car, pay under $6,000, and drive it all during school and even a while afterwards without that expensive student car loan.

I know, it’s tempting to buy a new or nearly new car, but try to resist. Take a look at cars from 2005 or so, and check out the consumer reports and reviews. You can find out if that model usually has serious maintenance problems and if the car will last.

More Good Advice: Avoid Floyd

Once again, not a joke! ;o) Floyd sold me my first car from a dealership. I had payments, and 2 years of college to go. Not the best combination, but I made it through. Think about whether you really need those payments. A student car loan or any car loan can help you get into a bigger, more expensive car. You probably don’t need that. You need basic, reliable transportation while you finish your education.

Do some research, pay cash if you can, and avoid 7 years of payments on a big SUV.

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