Students and Recent Grads: What You Need to Consider Before Purchasing a Car

Jun 19, 2017

Having a car at your disposal allows you to go anywhere you want, anytime you want. For a current student, recent or soon to be graduate, this is groundbreaking. Buying your first car can be both exciting and nerve-racking. Lack of experience can leave you wondering if you truly got the best deal, or just got swindled by the dealer.

Believe it or not, there is more to buying a car than a monthly payment and impressing your friends with your new wheels. To make sure you make a wise decision, we have put together some key factors for you to contemplate during this exciting journey.

Graduate

Research: Come Prepared

If you know what type of vehicle you want to purchase, do in-depth research before heading to the dealership. Look for incentive programs for recent graduates and students with a high GPA. Do you want to buy a new or used car? Does it have all the safety and tech features you are looking for? These are all things you should know before making any final selections.

Budget: Be Realistic

This probably won’t come as a surprise, but we recommend that you create a realistic budget before you start looking for your perfect car. The last thing you want to be doing is worrying about where you are going to find the money to pay your bill each month. Create a budget based off of your monthly expenses such as student loan payments, rent, health insurance, etc. A good rule of thumb is to keep your monthly payments below 20% of your net income.

Car Payments

Remember: The cost of a car is more than the monthly payment

Insurance rates for new drivers and first time car buyers can be high. The average rate for recent college graduates is about $2,000 a year, but of course this also depends on the vehicle you choose in addition to your driving record or history. Just like with your vehicle shopping, you should also shop for your insurance. When creating your budget don’t forget to factor this in. Also, there are other costs associated with owning a car. These include fuel, maintenance fees, excise tax and costs due to unexpected issues that may arise.

Your Wants and Needs: Prioritize them

Ultimately you need a car that will fit your lifestyle. Think about where you live and the type of driving you do most often. Look at the vehicle’s fuel efficiency, determine if it is going to fit into parking spaces and whether or not it is practical and dependable.

New Driver

Financing Your Car: Look at all of your options

If you choose to finance your car there are a couple different ways to go about it. You can choose to either go through the dealership or a bank, just make sure you do research on where the best terms are available. Being a student or recent graduate it is likely that you have a very short credit history (if you have one at all). Consider having a parent co-sign for the loan as it will open up more options for you.

Loan Application