I remember when I became a student (many years ago). Instead of worrying about what study equipment I need, and how much time I’d spend studying at weekends, the first thing I was interested in was when was I going to get my first car.
I had it in my head that being able to turn up to university in a shiny car would somehow enhance my learning experience. I suspect things are fairly similar with today’s youth, although there are of course some very practical reasons to owning a car whilst studying.
Getting to and from your place of study is perhaps the most urgent reason, but also it makes it easier to carry things around, and travel to and from home if your are studying a little way from your family home.
Buying a new car can be a daunting experience however many cars you have driven in the past, but when you are buying your first ever it can be a very worrying task indeed. So what advice would we give to a student looking for their first car? We have put together what we think are some of the most important things to know.
What Exactly Do You Need?
The first thing you need to get clear in your mind is what sort of vehicle you need. Note the word “need” as opposed to want. You may dream about driving around in a Scion FR-S, but when you are a student and on a lower budget you have to be realistic in your choice of vehicle.
You are looking for something sturdy, safe, and affordable. With your first car looks really should be way down on your list of priorities. As much as we would all love to be driving that racy red sports car, your dream car will have to wait.
How Are You Going To Finance The Car?
The chance that financing your first car is going to be the biggest stumbling block is one you will need to overcome. As a youngster obtaining a car loan is going to be very difficult. Most car loan companies will only lend to people who are employed in full time work, and earning above a certain amount of money each year.
One of the main reasons loan companies will not give car loans to students is for their lack of credit history. Whenever you apply for any form of credit, the potential lender will run a credit check on you to check your suitability as a borrower.
As a student you may not have had any credit before, and this will mean very little for lenders to make a judgement on. One good tip for students in this situation is to build up some sort of credit history by taking on a pre-paid student credit card.
These give you the opportunity to build up a financial reputation whilst not risking getting into any debt. This process does take some time, and will not help you finance a car in the short term.
If you do happen to obtain credit, you need to ensure that you are in a position to pay the debt off. If you default on your payments not only will you damage your credit rating but you will also lose your vehicle.
Buy With Cash
If at all possible it is your best option to pay for your first car with cash. That way you are debt free, and if something does happen to go wrong with your car you are not going to be stuck paying off a car loan for a vehicle you no longer have.
Insurance is Expensive
Motor insurance is notoriously expensive for younger drivers. Younger males are most likely to pay the most for their insurance, and it is not unusual for a student’s average yearly premium to run into the thousands of dollars.
The age, engine size, and model of your car will also affect how much you pay for insurance. The bigger and more powerful your car is the more you are going to have to pay to insure it. This is another reason why it is sensible to stick to a modest car when you are starting out.
Consider the Cost of Maintenance
Another issue that students often overlook when buying a vehicle is the cost of maintenance.
There are many relative costs involved with maintaining a car. Not only is there the fuel (which is very costly nowadays), but then you also have to think of replacement tyres, oil, and yearly testing.
There is also the cost of repairs that you might need if something goes mechanically wrong with your car.
When you are budgeting for your first car it is good to try and factor in some sort of monthly maintenance costs to your equations. Have a look at how much different car parts would cost.
Some cars are more expensive to maintain, so doing your research will help to ensure you buy a vehicle that you can afford to look after.
Be Careful Where You Buy
There is no real blueprint for buying a car safely without being ripped off. Some people would argue that you are as likely to get a bad deal from a car dealership as you are if buying a car privately.
You should always try to buy your vehicle from a recognised seller, or somebody whose contact details you can get access to. It is not advisable to buy a car from somebody you just met in a bar!
If you can get some sort of guarantee with the vehicle then you will have a little peace of mind that the car is in fairly sound condition. If you know somebody with experience with cars, or maybe even works in the automotive trade then it is a good idea to take them with you to view the vehicle. They may spot something you would not have looked for.
One of the most important pieces of advice for students buying their first car is to buy with your head and not your heart. It is very easy to fall in love with a car that is way over budget, expensive to insure, and hard to maintain. Buy sensibly and you will save a lot of money, and heartache.
This article was written by Timothy Ng who is a regular personal finance writer.