Classes begin soon! As a student (especially if you live in ice-cold Winterpeg), you will most likely rely on some type of transportation to get you to and from campus. You may be dreaming of a vehicle to help you get to class on time – and how much fun you could have on your days off.
While a vehicle may feel like a necessity, it can be challenging to get a car loan as a student. You probably haven’t had much time to build your credit history and you might not have a steady income as you work towards your career.
The good news is getting a car loan is possible – but you might have to deal with higher interest rates and a limit on how much you can borrow.
At Birchwood Credit, we help individuals with all credit backgrounds get approved for vehicle loans. We’ll give you the basics on how car loans work and tips for applying so you can feel confident getting a car loan as a student.
HOW DOES GETTING MY FIRST CAR LOAN WORK?
Getting your first car loan is a big and exciting step on the road to getting a vehicle – not to mention the freedom that comes with it! If you’ve never had a loan before, we’ll break it down for you. Simply put, here’s how a car loan works:
A loan means you are borrowing money: When you take out a car loan, you borrow a fixed amount of money that allows you to make your car purchase. You’re required to pay it back with interest on a payment timeline determined in your contract.
Loan payment amounts depend on the loan term: Generally speaking, the longer your loan term, the lower your monthly car payments will be – however, your interest will be higher as you’re taking longer to pay off the loan.
Your credit score is an important factor: The dealership will typically determine your loan amount, interest and repayment terms based on your credit score and income. At Birchwood Credit, we look beyond your credit score and evaluate your entire financial situation (which is how we’re able to accept all credit types).
WHAT ARE SOME TIPS FOR BUYING A CAR AS A STUDENT?
Financing a car is actually a great way to build up your credit, especially if you’re a student who hasn’t had a lot of time to build your credit history. Here are some of our top tips for buying a car as a student in Manitoba!
Work on your credit score: Your credit score is a big deciding factor that lenders will consider before approving a loan. The better (higher) your credit score, the better loan terms you’re likely to get. One easy way to increase your credit score? Pay your bills on time, every time. For example, you could take out a credit card in your name and use it for essentials, then pay it off every month.You can also automate your payments to make sure you never miss them.
Build your income: Another thing lenders consider when approving a car loan is income. Credit score isn’t everything – they also want to make sure you’ll be able to make your payments! Having a full-time or even part-time job will build your case, proving you’ll have enough money to make your monthly payments.
Save for a down payment: The more money you can put up-front for a car, the less you’ll need to borrow (and the less interest you’ll pay on top of that). If you’re able to, put a little bit of money away each month leading up to your vehicle purchase so you can take some of the burden off of your loan financing.
Have a cosigner: Another option you have is to use a cosigner on your vehicle loan. A cosigner essentially agrees to take over the loan if you’re unable to repay it. Choosing a cosigner with excellent credit will boost your application, helping you get approved.
Get pre-approved: Applying for a loan at too many dealerships will actually harm your credit score. Before seriously shopping around for a vehicle, it’s a good idea to get pre-approved so you know how much you’ll be able to afford when car shopping.
Did you know? At Birchwood Credit, you can get pre-approved within 48 hours. We look beyond your credit score at your entire financial situation and we’ll help you find a car that meets your needs and budget. Once you get pre-approved for financing, you’ll have a clearer budget so you won’t be disappointed if you find a car you love that’s outside your approved financing rate.
WHAT DOCUMENTS WILL I NEED WHEN BUYING A CAR AS A STUDENT?
Car loans require some documentation, so you’ll want to make sure you’re prepared! Here are some documents and requirements you may need in order to get approved for a loan.
•Be 18 or older. Students must be over 18 years of age to get a loan.
•Pay statements. If you have a job, it’s recommended you bring the last three pay statements to your loan meeting.
•Driver’s license. You don’t need a driver’s license to apply for a loan – but if you have one, bring it.
•Photo ID. Bring a document with photo ID of yourself.
•Proof of address. Bring a document with proof of your current address.
•Cosigner information. If you are planning on having a cosigner, they will need to bring their documents as well.
HOW DO I START THE PROCESS OF GETTING AN AUTO LOAN AS A STUDENT?
Ready to buy a car as a student in Winnipeg? That’s so exciting and our team is here to help! At Birchwood Credit, we can grant you a vehicle loan with our in-house financing and we accept all credit types – great news if you’re a student! We’ll work with you to select a vehicle and decide on payment terms that you’re happy with (and can afford).
If you want to start budgeting before you visit us, try out our Car Loan Calculator. Feel free to experiment with different vehicle costs and loan durations to get estimated bi-weekly and weekly payments. Planning for your next vehicle has never been easier!
You can also check out more tips on Understanding Your Credit Score and Why it Matters and Steps to Improve Your Credit Score (And How We Can Help). Even if you have less-than-perfect credit, we’ll work with you to find an affordable loan option so you can get on the road soon!
