What Students should consider before Taking on Auto Loans

College days are a time of freedom and often the first time a student lives independently. The anxieties of having finance in place to cover tuition and living costs are sorted out, student loans have been dispersed, and the student can relax. Often they don’t need to worry about the huge amount of debt they have just signed up for until after graduation when the presumption may be that a well paying job awaits. Students who don’t have a car may start to think of the advantages of owning one but there are things that the student should consider before taking an auto loan.

It may well appear to be a necessity for some students to have a car. It would ease travel between college and off campus accommodation, and ease the lives of those who combine work with classes. It makes travel between home and school easier, and many also consider owning a vehicle a bit of a status symbol or a way to improve their social life. Due consideration should be given to if in fact it is a necessity though to own a car, due to all the related costs which may well end up eating into available funds.

Not only will a student who takes an auto loan have monthly repayments to meet, they will have an additional loan to service after graduation, on top of their student loans. The costs of running a car can be high as there are insurance premiums, gas, auto services, essential maintenance and sudden repairs. When they are all added up it makes the option of a bicycle, feet or public transport, look far more attractive.

If owning a car is still an affordable necessity after all the associated costs have been considered then the student may well decide that an auto loan is necessary. If running costs appear tight and may pose a problem but a car is still deemed a necessity the student should make contingency plans to off set the running costs. These can include always advertising for other students to share rides and pay towards gas and running costs.

Students that have no credit history can begin to establish one by having an auto loan, but should be aware that no credit is perceived as better than bad credit. If the loan repayments are not met in a timely fashion then late payments will be recorded on their credit report and a bad credit history established. Thus auto loans should only be considered if the student is certain that meeting the payments is realistic.

It is important to give due consideration to each of these points before considering taking on an auto loan as a student. Amassing unnecessary financial obligations can be a dangerous practice unless the student has planned carefully to take allowance of the costs of running the car as well as servicing the auto loan. If the decision is made to go ahead with a loan then careful comparison shopping online should be the next step.