Can you buy a new car with GRAD PLUS loans when you are in med school?

[techiewizz]

Is there a maximum number of grad plus loans you can take out? Assuming I have no loans from undergrad, and no credit history at all. Also, I will be paying for school and living expenses via stafford and grad plus loans. My parents will not be filling out fafsa, and I dont want to get into the details of that, because that is not the topic Im asking about..

Also, I don't want to deal with used cars anymore. A year ago, I got a used car on craigslist and it broke down in 3 days. The seller didn't want it back and didn't give me money back and I lost a lot of money. I need a new car with warranty, perhaps a honda civic for like $18k.

I am wondering if there is a max amount of grad plus loans that I can take out.

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[frosted_flake]

If that is the case I am going to sell my current car and do that!

 

[techiewizz]

wow I wrote a lot of alsos. Didnt mean that lol.

 

[TheWeeIceMan]

I believe that you can borrow up to the COA that the school provides, unless you get special permission to borrow more. Someone correct me here, if that's not right.

 

[mik30102]

There is no maximum for the total amount you can take out for a grad plus loan. However on a per year basis the total amount of loans you can take out in general is equal to the total cost of attendance. Some schools are very generous in what they allow for living expenses, and if you were frugal you could perhaps funnel that money into a cheap used car (3-5k). 18k is certainly out of the question. I would work summers and save towards a nice used car (11kish). Also remember you don't really need a car at most places until 3rd year. That would give you 3 summers to save.

 

[techiewizz]

wow really? ugh I thought I could just buy a car with grad plus loans.

 

[techiewizz]

Do you think it's possible to finance a car with grad plus loans? And I am talking about a car that's worth like 18k.

I just really am looking for a reliable car that will last me through med school, residency, and beyond. I think i saw a post on here about someone else saying what kind of car they should buy, and I am just wondering how to get the money to buy it lol

 

[Hemorrage]

Technically speaking (as far as i know), its against the rules to use federal loan money to purchase a car. That being said, it is YOUR money and they don't exactly keep track of what anyone spends their money on so you can easily get away with it. I don't think any school in the US has a cost of attendance high enough where you'd have enough left over after food and living expenses. If you do manage to find a school with around 25k in living expenses, you can get a roommate (600-700 a month in rent then) and spend frugally on food (~200 a month). That would leave you with around 13-14k to spend on a car.

edit: another technicality i forgot to mention was that loan refund disbursements happen twice a year, so you won't get 25k up front in August when you start. Now on the other hand, if you parents are paying for your living expenses (as are mine), you can take out the total living expenses and save it. At that point, it would be somewhat the equivalent of financing a car at 6.8% APR.

 

[knv2u]

Technically speaking (as far as i know), its against the rules to use federal loan money to purchase a car. That being said, it is YOUR money and they don't exactly keep track of what anyone spends their money on so you can easily get away with it. This being said, i don't think any school in the US has a cost of attendance high enough where you'd have enough left over after food and living expenses. If you do manage to find a school with around 25k in living expenses, you can get a roommate (600-700 a month in rent then) and spend frugally on food (~200 a month). That would leave you with around 13-14k to spend on a car.

edit: another technicality i forgot to mention was that loan refund disbursements happen twice a year, so you won't get 25k up front in August when you start. Now on the other hand, if you parents are paying for your living expenses (as are mine), you can take out the total living expenses and save it. At that point, it would be somewhat the equivalent of financing a car at 6.8% APR

1. I wondered about the first sentence too, but I don't think there is actually going to be an audit.
2. If you are working prior to medical school and have good credit history, you can finance the vehicle separately at a low APR (look for the 0% or 1.9% rates or so) and then use funds from refunded loan money to pay payments while in school, and you could work during the summer to reduce reliance on school funds.
3. You bring up a good point about the higher APR, but for some, it might be the only viable option.

 

[Hemorrage]

1. I wondered about the first sentence too, but I don't think there is actually going to be an audit.
2. If you are working prior to medical school and have good credit history, you can finance the vehicle separately at a low APR (look for the 0% or 1.9% rates or so) and then use funds from refunded loan money to pay payments while in school, and you could work during the summer to reduce reliance on school funds.
3. You bring up a good point about the higher APR, but for some, it might be the only viable option.

@1. Yeah they're definitely isn't.. i've asked med students at the schools ive interviewed at myself and thats where i've discerned my response from.
@2. This is definitely a viable option for non-trads who have worked before entering, however, for the bulk of students going straight in (like myself), the only jobs ive ever held are summer and campus jobs which net <5k annually.
@3. Definitely. At the end of the day, 6.8 isn't so bad and if you view it as the premium you pay for opportunity cost, then its definitely worth it. Of course you'll have the people that will complain and say they'd rather ride their bike to school or take public transportation than go into debt and all the power to them, but i like to have some comforts in life considering i'm toiling away at books for the next four years.

 

[techiewizz]

@1. Yeah they're definitely isn't.. i've asked med students at the schools ive interviewed at myself and thats where i've discerned my response from.
@2. This is definitely a viable option for non-trads who have worked before entering, however, for the bulk of students going straight in (like myself), the only jobs ive ever held are summer and campus jobs which net <5k annually.
@3. Definitely. At the end of the day, 6.8 isn't so bad and if you view it as the premium you pay for opportunity cost, then its definitely worth it. Of course you'll have the people that will complain and say they'd rather ride their bike to school or take public transportation than go into debt and all the power to them, but i like to have some comforts in life considering i'm toiling away at books for the next four years.

I agree about the comfort part.

Also, I have noooo credit history!!! How do I go about that?

I don't really make any payments! Just for my phone and stuff.

 

[shenellica]

Do you have to buy the car with all the money upfront? My car is a little over $20k but I'm making monthly payments of $299 and that isn't too bad for me. I also wanted a new car because I had bad luck with used cars.

 

[Hemorrage]

I agree about the comfort part.

Also, I have noooo credit history!!! How do I go about that?

I don't really make any payments! Just for my phone and stuff.

Do you have any credit cards? If not, hurry up and get one. I suggest discover.. awesome benefits (including rental car insurance for interviews). If you do get a card now though, it definitely wont be "long" enough for you to be considered reliable enough to finance on your own, which means you'll likely need a co-signer on the auto loan. This is assuming you want to go the financing route.. if you do manage to get enough money to buy the car outright, which is possible, then you don't need to worry about this stuff. The one positive for financing is that you can build your credit granted you get approved with a co-signer.

edit: also forgot to mention that the likely hood of you getting approved for an autoloan increases proportionally with how much you put down. eg: if you put down 10k for a 20k car (leaving 10k to be financed) you're much more likely to get it rather than if you offered 2k for the 20k car (more risk for the loaner).

 

[AlbinoHawk DO]

You can lease a smart car for like $99 monthly. Perhaps even a Fiat for $150.

 

[medicalhope]

You can lease a smart car for like $99 monthly. Perhaps even a Fiat for $150.

Ditto to this. I don't know much about cars, but if you absolutely want a new car, leasing is probably a good option.

 

[Hemorrage]

Ditto to this. I don't know much about cars, but if you absolutely want a new car, leasing is probably a good option.

You can lease a smart car for like $99 monthly. Perhaps even a Fiat for $150.

You both are overlooking the problem- OP is trying to get a car without parental support (aka no cosigner). Getting a lease requires pretty good credit.. which he/she doesn't have.

 

[darkjedi]

It would be really difficult to free up $18k from your cost of living budget to buy a car. You are only budgeted ~$20k for cost of living anyway. Unless you can live on $2k a year, you will have to buy a cheaper car. There are plenty of places where you can buy a cheap, reliable used car. Craigslist is not one of them. Look for trusted car auction places. Some of the only let registered car dealers bid, but sometimes you can find newspaper listings for dealers willing to take you to a car auction for a small fee.

 

[techiewizz]

How good of a credit would I need to finance a car? Also, what counts as "good credit"?

Right now the only thing I pay monthly for is my smart phone bill (4G internet, minutes, text). If I pay that with a credit card for $30 a month, and then pay it back at the end of a month, for like 6 months, will that give me good credit? If it's just 30 a month?

 

[darkjedi]

How good of a credit would I need to finance a car? Also, what counts as "good credit"?

Right now the only thing I pay monthly for is my smart phone bill (4G internet, minutes, text). If I pay that with a credit card for $30 a month, and then pay it back at the end of a month, for like 6 months, will that give me good credit? If it's just 30 a month?

Best way to build credit is to simply have a credit card on your record for a long period of time, use it at least occasionally and never miss a payment. If you can't qualify for a credit card, there are secured ones where you put up like $500 initially, which serves as your deposit and credit limit. These still help you build credit score.

 

[Hemorrage]

How good of a credit would I need to finance a car? Also, what counts as "good credit"?

Right now the only thing I pay monthly for is my smart phone bill (4G internet, minutes, text). If I pay that with a credit card for $30 a month, and then pay it back at the end of a month, for like 6 months, will that give me good credit? If it's just 30 a month?

24 months is considered the minimum so 6 months definitely won't be enough.

 

[techiewizz]

24 months is considered the minimum so 6 months definitely won't be enough.

Wow. Holy cow that's a long time. Is it okay if I just use it occasionally though? Like, if I pay for my phone evvery couple months or something. Will that really build a good credit score though?

 

[Hemorrage]

Wow. Holy cow that's a long time. Is it okay if I just use it occasionally though? Like, if I pay for my phone evvery couple months or something. Will that really build a good credit score though?

Building a really good credit score requires a combination of high income, long length of credit history, no late payments, etc. In your case, the best thing you can do is transfer all of your monthly expenses, such as your phone bill, to being paid by the credit card. Then pay off the credit card in full every month (you don't accrue interest this way) and it looks very good because it shows that you're able to pay your debts.

 

[TreadLightly]

Technically speaking (as far as i know), its against the rules to use federal loan money to purchase a car.

No it's not. My school gives me close to $4k/year for "transportation". There's nothing stopping me from using that to make payments on transportation.

 

[rainbow girl]

Is there a maximum number of grad plus loans you can take out? Assuming I have no loans from undergrad, and no credit history at all. Also, I will be paying for school and living expenses via stafford and grad plus loans. My parents will not be filling out fafsa, and I dont want to get into the details of that, because that is not the topic Im asking about..

Also, I don't want to deal with used cars anymore. A year ago, I got a used car on craigslist and it broke down in 3 days. The seller didn't want it back and didn't give me money back and I lost a lot of money. I need a new car with warranty, perhaps a honda civic for like $18k.

I am wondering if there is a max amount of grad plus loans that I can take out.

There are financing options available for buy a car, so you don't need to pay off up front. New cars generally have better interest rate than used ones, so that's a plus. Around Aug would be a better time to buy a car than now, because dealers try to get rid of the current year cars to make room for next year model. Shop around a lot, negotiating on both the car and the interest rate. I bought a new camry, so I know that toyota has some financing for recent college grad (your loan is with toyota financing instead of other loan company) and $500 rebate if you graduate from college in less than 2 years (so again wait until you graduate). But make sure you mention your college diploma at the very last when they already give you their absolute low price. I heard Honda has something similar too. I didn't look for other brands so not so sure about them.
There are some cars buying app which you can put in the amount financing, estimated interest rate, down payment, ect to calculate the monthly payments. For a 20k loan with below 5% I think the monthly payment would be around $350. Do your math with your living allowance to see how much you can afford on car payment. That would give you a better idea.
Or you can ask your parents to co-sign your car, would certainly give you better interest rate.

 

[knv2u]

Best way to build credit is to simply have a credit card on your record for a long period of time, use it at least occasionally and never miss a payment. If you can't qualify for a credit card, there are secured ones where you put up like $500 initially, which serves as your deposit and credit limit. These still help you build credit score.

Both of these suggestions are great. Also (especially for the very young high school or just graduated high school crowd), you can have your parents add you to one of their credit cards that carriers a very small balance/credit line to help you start building credit. You can then apply for your own with more competitive rates. My parents did this for me in high school, and by the time I was in college (end of sophomore year?), I had a decent credit score (720+) and a few cards. Just make sure to keep low balances and not to overextend yourself.

 

[techiewizz]

My parents won't be adding me anywhere or cosigning, so I have to do it on my own. My parents don't have credit cards.

 

[1badmamajama]

Is there a maximum number of grad plus loans you can take out? Assuming I have no loans from undergrad, and no credit history at all. Also, I will be paying for school and living expenses via stafford and grad plus loans. My parents will not be filling out fafsa, and I dont want to get into the details of that, because that is not the topic Im asking about..

Also, I don't want to deal with used cars anymore. A year ago, I got a used car on craigslist and it broke down in 3 days. The seller didn't want it back and didn't give me money back and I lost a lot of money. I need a new car with warranty, perhaps a honda civic for like $18k.

I am wondering if there is a max amount of grad plus loans that I can take out.

Short answer: yes you can.
But you do want to minimize your loans as much as possible.