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Should I take out a student loan and use it towards a Car?

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Kierre210
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Should I take out a student loan and use it towards a Car?  Reply with quote  

My vehicle broke down on me and the amount of money that would have been used to fix it was not worth it so I am currently without a vehicle. I am wondering if it would be a bad idea to take out a student loan and use it towards a vehicle, I currently do not have any loans out nor am I in any kind of debt, my family is able to pay for my tuition but we cannot afford a vehicle at this time (the one I had was paid off already). Basically should I try to stay debt free and not take out any loans and rely on friends/family/bus for transportation or would taking out a loan for a vehicle not be such a bad idea?
Post Sat Feb 20, 2016 2:53 pm
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oldguy
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quote:
money that would have been used to fix it was not worth it


When you say "not worth it" what do you mean? That often happens with a collision, ie, the car is 'totaled', not worth fixing. But with a break-down - not so much.

But if you do decide to get a car loan, use a bank or a credit union. Technically, using a student loan for a car is fraud. Plus, a car loan has better interest rates than a student loan - SL rates are over 6%, car loans are 4% or 5%.
Post Sat Feb 20, 2016 4:08 pm
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GardenCat
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Also, don't saddle yourself with a loan for a new car. Get a very good and reliable 3 year old (at least) and have it checked out by a trusted mechanic before you buy it! Any reputable dealer will let you take the car to your mechanic for a "buyers check", which will probably cost you $50-100 and is well worth it.
Credit Unions here in CO currently have car loans for under 4%
Post Sat Feb 20, 2016 4:38 pm
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littleroc02us
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Do you have a job or jobs while going to school, that you could use to put some money away towards an older used car that is reliable such as a Toyota Camry with 180k on it? In the meantime you could find creative ways to get around using public transportation or a bike. I wouldn't go into debt for a car. One of the reasons my wife and I have money is we don't go into debt when buying cars, we save up and pay cash.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Feb 22, 2016 2:06 pm
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timlisten
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Is used car a consideration? I found that used car saves money in the long run especially when you cannot afford a new car at the moment.
Post Tue Feb 23, 2016 4:07 pm
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littleroc02us
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I can afford to buy new cars, but I chose not to for the following reasons:

1. New cars lose 40% of their value in the first 3 years, let someone else pay for the depreciation.
2. A brand or model such as a Toyota Camry or Honda Pilot at 100k are practically brand new and can run easily another 150k.
3. Insurance rates are higher on newer cars due to the higher replacement costs.
4. It's inevitable that someone will ding your paint job on the new car.
5. Pay cash for the used car and if you take the average $400 dollars someone makes in payments for a new car and invest it in the S&P 500 every month for 30 years, you'd have 1 Million dollars tax free.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Tue Feb 23, 2016 4:16 pm
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