Can you use undergrad loans to buy a car?

[43092]

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[Hobakie]

yes and no. ppl who have money left over from refund checks at the end of the semester will usually do something like this ,but I doubt most people would have 7000 dollars in refunds after tuition and all of the costs from undergrad

 

[43092]

yes and no. ppl who have money left over from refund checks at the end of the semester will usually do something like this ,but I doubt most people would have 7000 dollars in refunds after tuition and all of the costs from undergrad

So could I take out unsubsidized loans to pay for a car (I get 100% of my need covered by my school).

 

[Hobakie]

So could I take out unsubsidized loans to pay for a car (I get 100% of my need covered by my school).

no. unsubsidized loans are federal loans so they are only given because of need. if your school already covers your needs they will not give you more, especially if you plan on using the money for a car. Its also safe to keep unsubsidized loans to a minimum since theres an interest rate. your best bet would be to save up and/or do scholarships. with scholarships you dont have to pay the money back so that extra money the school would still give to you.

 

[43092]

no. unsubsidized loans are federal loans so they are only given because of need. if your school already covers your needs they will not give you more, especially if you plan on using the money for a car. Its also safe to keep unsubsidized loans to a minimum since theres an interest rate. your best bet would be to save up and/or do scholarships. with scholarships you dont have to pay the money back so that extra money the school would still give to you.

Is subsidized the one without interest during undergrad? If so, I meant that one. Well that sucks..

 

[Evisju7]

I don't understand this. If someone gave me money (granted LOANED money), I would not be spending frivolously. Ride a bike

 

[43092]

I don't understand this. If someone gave me money (granted LOANED money), I would not be spending frivolously. Ride a bike

You don't know why I need a car. I need it to get to work and my ECs that are hours away by bike. Time is money and I'm fine with graduating with 4.5k of debt at a school that costs 240k. In the end, I'm sure my parents will help me out or I'll just pay monthly car bills which suck due to interest.

 

[mysdnhandle]

Its your money, use it when you need it!

Its your money but that sounds foolish to do unless its an emergency. You are paying interest on a depreciating asset. Id try to save up 3k for a beater corolla or civic. Affordable in your situation, reliable, fuel efficient, and damn sexy.

 

[Evisju7]

no, you're right. You didn't mention this question pertained to your situation. I just jumped to general assumptions- sorry. But seriously consider finding closer opportunities and maybe taking public transportation. You'll save on gas and maintenance too. What are you driving now?

You don't know why I need a car. I need it to get to work and my ECs that are hours away by bike. Time is money and I'm fine with graduating with 4.5k of debt at a school that costs 240k. In the end, I'm sure my parents will help me out or I'll just pay monthly car bills which suck due to interest.

 

[43092]

no, you're right. You didn't mention this question pertained to your situation. I just jumped to general assumptions- sorry. But seriously consider finding closer opportunities and maybe taking public transportation. You'll save on gas and maintenance too. What are you driving now?

It's my fault, I should have mentioned it. I'm not driving anything. I had a car in high school and someone totaled it, so my parents pocketed the money (their money). I don't need one at school, everything is walking distance, but I'm spending 10 hours on public transportation a week when it could take 3 hours by car.

 

[DoctorSynthesis]

I met a med student who used his loan money to buy a Mercedes.

 

[43092]

Its your money, use it when you need it!

Its your money but that sounds foolish to do unless its an emergency. You are paying interest on a depreciating asset. Id try to save up 3k for a beater corolla or civic. Affordable in your situation, reliable, fuel efficient, and damn sexy.

I have no money. Haha just enough for the insurance, stickets, etc. How hard is it to get a loan from a dealership? Like a .9 percent one or whatever?

 

[43092]

And honestly, this sounds like a spoiled rich kid, but if my parents see that I can buy a car on my own, they most likely will just give in and buy it for me. I just want a 4-5k car.

 

[amazing tekkers]

I met a med student who used his loan money to buy a Mercedes.

Good man.

 

[TheWeeIceMan]

I met a med student who used his loan money to buy a Mercedes.

lol, what an idiot.

 

[DoctorSynthesis]

lol, what an idiot.

He thinks that inflation will outpace interest so he can just keep making minimum payments on the loan. I didn't argue because I don't know but I severely doubt that's true.

His other logic is he might as well enjoy his future money now. Also he said that they gave him too much loans anyway.

My other premed friend then agreed with him and I was dumbfounded at that point.

 

[mysdnhandle]

I have no money. Haha just enough for the insurance, stickets, etc. How hard is it to get a loan from a dealership? Like a .9 percent one or whatever?

I think car loans work differently than student loans, you cant defer them and they have to be paid back in a fixed period, like 1-3 years. So im assuming you would be paying off that car loan with your student loan since you cant afford the car in the first place. So you'd have two sources of interest.

It all depends on your situation, see what help you can get from people and try to get a good value car and use what you will from your loan. Having bought a car in that range myself, i can say 3-4-5k is the sweet spot in terms of value. Its no mercedes but if thats necessary at this age youre choosing the wrong career. When youre shopping for a used car, look at miles, salvage history, bluebook reliability ratings, maintenance records, rust, and judge the person youre buying it from. Dont overthink it though because if youre getting a used honda or toyota theres little that goes wrong, theyre great cars.

 

[TheWeeIceMan]

He thinks that inflation will outpace interest so he can just keep making minimum payments on the loan. I didn't argue because I don't know but I severely doubt that's true.

His other logic is he might as well enjoy his future money now. Also he said that they gave him too much loans anyway.

My other premed friend then agreed with him and I was dumbfounded at that point.

Haha, that is some weird logic on a depreciating asset. The sad thing is, similar thinking is probably not that uncommon in med school (or any other place with mostly 20-somethings).

 

[allantois]

I suggest that you talk to the financial aid office at your school. They sometimes could come up with somethings. Also, what do you mean you get 100% of need covered? What is need? Does it include your tuition and living expenses (full COA). If so, can you buy a car on those money and still have enough to live on? And what are you driving now?

As for the bike comment, it is absolutely impossible to go without a car where I live. It could be a 10 mile drive to a certain hospital and it rains daily, or I should rather say pours. Today I got soaking wet from just running from my car to class (with an umbrella!).

 

[mysdnhandle]

I suggest that you talk to the financial aid office at your school. They sometimes could come up with somethings. Also, what do you mean you get 100% of need covered? What is need? Does it include your tuition and living expenses (full COA). If so, can you buy a car on those money and still have enough to live on? And what are you driving now?

As for the bike comment, it is absolutely impossible to go without a car where I live. It could be a 10 mile drive to a certain hospital and it rains daily, or I should rather say pours. Today I got soaking wet from just running from my car to class (with an umbrella!).

http://www.mrmoneymustache.com check out this blog for inspiration

 

[43092]

I think car loans work differently than student loans, you cant defer them and they have to be paid back in a fixed period, like 1-3 years. So im assuming you would be paying off that car loan with your student loan since you cant afford the car in the first place. So you'd have two sources of interest.

It all depends on your situation, see what help you can get from people and try to get a good value car and use what you will from your loan. Having bought a car in that range myself, i can say 3-4-5k is the sweet spot in terms of value. Its no mercedes but if thats necessary at this age youre choosing the wrong career. When youre shopping for a used car, look at miles, salvage history, bluebook reliability ratings, maintenance records, rust, and judge the person youre buying it from. Dont overthink it though because if youre getting a used honda or toyota theres little that goes wrong, theyre great cars.

For sure, I think I could totally pay the monthly bills. But I really don't want to pay much interest if I could just borrow it from the parents for free.

 

[43092]

I suggest that you talk to the financial aid office at your school. They sometimes could come up with somethings. Also, what do you mean you get 100% of need covered? What is need? Does it include your tuition and living expenses (full COA). If so, can you buy a car on those money and still have enough to live on? And what are you driving now?

As for the bike comment, it is absolutely impossible to go without a car where I live. It could be a 10 mile drive to a certain hospital and it rains daily, or I should rather say pours. Today I got soaking wet from just running from my car to class (with an umbrella!).

I will have no undergrad loans and don't pay much (almost 0) to begin with.

 

[cinnalyn]

I have no money. Haha just enough for the insurance, stickets, etc. How hard is it to get a loan from a dealership? Like a .9 percent one or whatever?

Last year my first vehicle from high school decided to get a double gas leak near the engine so I was stuck between a rock and a hard place and had to go to a used car dealership and buy a car. They mostly looked at my credit score and also how long I had been at my current job. They really just wanted to see if they could trust me to pay it off. I'm not sure how you'd go about doing that without a steady, long-term job, unless you have all the money upfront. I could be wrong, though, as I'm just speaking from personal experience.

 

[43092]

I would just go to one of your local banks(preferably one you have an account at) and talk about a used car loan with them. My girlfriend easily got such a loan that allowed her to buy a car.(Technically, the bank has the title to the car) The loan payments are fairly reasonable too. I think you would be better off getting a loan for a car that costs more than you could afford out of pocket than buying a <$1000 junker.

I know, but if I can do it on my own, my parents will most likely make the payments. I have my sister as a backup. But I need to do it on my own and I think a bank loan would have a lot of interest? I think if you get a car loan it's only a 1 percent interest.

 

[Zelda840]

Your interest rate on a car loan will depend on your credit score, length of credit history, and debt to income ratio.

 

[kami333]

I know, but if I can do it on my own, my parents will most likely make the payments. I have my sister as a backup. But I need to do it on my own and I think a bank loan would have a lot of interest? I think if you get a car loan it's only a 1 percent interest.

Keep in mind low/no interest car loans are usually for new cars. Used car loans will run 2.5%+

 

[Frostbite22]

You can definitely use loans to buy a car. Whether you get subsidized (the one you want) or unsubsidized will depend on fafsa. Since you have a scholarship to pay for you tuition more than likely they will give you an un-subsidized one. I had to live on this for a while when I was going through a rough patch for a semester in undergrad and couldn't work. Basically whatever amount they offer you can take the full amount and it is deposited into your bank account. Just be sure not to take out too much, and spend it frivolously.

If you have never had credit (i.e. a credit card, or other type of loan) and are only 18, It is unlikely you will be able to get a car loan without a co-signer, so it might be beneficial for your parents to just take out the loan for themselves because the interest rate will be lower. If by some chance you do get a loan it will probably end up being a higher interest rate than what the school could offer. Overall I doubt you'll get off the hook with an interest free car, but its doable.

Hope that helped

 

[darkjedi]

I'm not sure why you would use unsubsidized loans as a car loan. Auto loans are typically cheaper than student loans if you have decent credit, since they can just repossess your car if you default.

 

[43092]

I'm not sure why you would use unsubsidized loans as a car loan. Auto loans are typically cheaper than student loans if you have decent credit, since they can just repossess your car if you default.

I think I'll do this. I don't know if I have decent credit, I have a few credit cards/bills in my name (internet/phone) and have never paid late.

So if I get a car loan, can I just pay it all in total in a month instead of the bill amount each month? This is where my parents will cave because they hate interest.

 

[43092]

You can definitely use loans to buy a car. Whether you get subsidized (the one you want) or unsubsidized will depend on fafsa. Since you have a scholarship to pay for you tuition more than likely they will give you an un-subsidized one. I had to live on this for a while when I was going through a rough patch for a semester in undergrad and couldn't work. Basically whatever amount they offer you can take the full amount and it is deposited into your bank account. Just be sure not to take out too much, and spend it frivolously.

If you have never had credit (i.e. a credit card, or other type of loan) and are only 18, It is unlikely you will be able to get a car loan without a co-signer, so it might be beneficial for your parents to just take out the loan for themselves because the interest rate will be lower. If by some chance you do get a loan it will probably end up being a higher interest rate than what the school could offer. Overall I doubt you'll get off the hook with an interest free car, but its doable.

Hope that helped

What's a good credit score? Mine's like 700 and the negative things on my report is having too many accounts... even though I pay them all on time.

 

[darkjedi]

I think I'll do this. I don't know if I have decent credit, I have a few credit cards/bills in my name (internet/phone) and have never paid late.

So if I get a car loan, can I just pay it all in total in a month instead of the bill amount each month? This is where my parents will cave because they hate interest.

If the interest rate is low, it's to your benefit to try and lengthen the amount of time it takes to pay back. Interest isn't "all bad", especially if it's comparable to inflation. Hating interest would not be smart financially.

Where are you going to get your money to pay off your your bill in total?

What's a good credit score? Mine's like 700 and the negative things on my report is having too many accounts... even though I pay them all on time.

700 is considered an excellent credit score.

 

[43092]

If the interest rate is low, it's to your benefit to try and lengthen the amount of time it takes to pay back. Interest isn't "all bad", especially if it's comparable to inflation. Hating interest would not be smart financially.

Where are you going to get your money to pay off your your bill in total?


700 is considered an excellent credit score.

Parents/sister. They understand I need one, but are soooooooooo cheap.

 

[darkjedi]

Parents/sister. They understand I need one, but are soooooooooo cheap.

If they are going to pay for it anyway, why bother taking out a loan to begin with?

 

[allantois]

Med schools should start requiring pre-meds to take a personal finance class.

 

[Fedaykin]

So could I take out unsubsidized loans to pay for a car (I get 100% of my need covered by my school).

This actually has very little to do with need like other people are saying. You can borrow above need, you just aren't guaranteed to get those loans. What it actually comes down to is a figure your financial aid office calls Cost of Attendance. Somewhere on your financial aid website will be a Cost of Attendance figure that looks like a line-item budget broken down into things you need money for. Some of them will be school needs (eg, tuition) and some will be personal needs (eg, room and board). Your Cost of Attendance is the number these add up to. There will also be some nuances; some lines like tuition may give a per credit figure, and room and board will often vary whether you're living on campus, off campus, or with mom and dad.

Loans come in two flavors: certified and non-certified. The basic breakdown is that certified loans cannot exceed your CoA while non-certified loans can. Say that your CoA is $18,000 this semester. You get a federal loan for $8,000 and a private loan for $24,000. Certification means that before the loan is disbursed to your school the lender will call the school and find out how much you've already taken out compared to your CoA. So the government calls up your school and says "Hey, we've approved 43092 for an $8,000 loan for this semester. What's his CoA?". Your school responds that your CoA is $18,000 and you've so far received $0, so the government send them $8,000. Then the private lender calls up your school and says "Hey, we've approved 43092 for a $24,000 loan for this semester. What's his CoA?". Your school responds that your CoA is $18,000 and you've already received $8,000. At this point, the lender reduces the loan to $10,000 which is disbursed to your school. This brings the amount you've borrowed up to your CoA and you can't receive further certified loans. If you're ever reading about a loan product and see the phrase "borrow up to the cost of attendance" or "disbursed directly to the school for your convenience," it's a certified loan. The fact it's going to your school actually has nothing to do with convenience; it's so your school and your lenders can ensure you're not borrowing more than they want you to. "For your convenience" is just a way businesses mask things they do which they don't expect you to like.

You can still receive non-certified loans to any amount a lender will agree to lend you. The problem is that these are high-risk loans and following the financial crisis that began six years ago almost all institutions offering them discontinued them. I looked for one extensively at one point in 2010 and found literally none that I could borrow. The ones that still exist are for extremely specific circumstances like residency relocation. If you try to look for one just to have some extra money you're going to feel like you're looking for a unicorn.

 

[43092]

If they are going to pay for it anyway, why bother taking out a loan to begin with?

Because if I say, hey buy me a car, they'll laugh and say not now. I've been telling them for the last year..

 

[Zelda840]

700 is a good credit score, but not excellent. If you haven't ever had any major loans, I think you should find a place that will give you a very low interest rate with a cosigner (verify that your name will be first on the loan and that they report to credit agencies monthly) and make the payments for at least six months before paying it off in full. It'll be worth the very small amount of interest you will pay because it'll be a big boost to your credit score.

 

[43092]

Whats to say that won't be their response when you ask them to pay your loan? If they chose not to pay it would you be able to make the loan payments yourself? Owning a car will suck up a lot of your money between gas, insurance, maintenance, and all the unexpected repairs that will undoubtedly occur. Not to mention the cost of the car itself.

Trust me, I know my parents. They want me to have a car. For example, my mom has been bitching for months about not having internet (I went to Starbucks) so I ****ing called them and now they're happy.

 

[43092]

700 is a good credit score, but not excellent. If you haven't ever had any major loans, I think you should find a place that will give you a very low interest rate with a cosigner (verify that your name will be first on the loan and that they report to credit agencies monthly) and make the payments for at least six months before paying it off in full. It'll be worth the very small amount of interest you will pay because it'll be a big boost to your credit score.

Sweet! How much are monthly payments?

 

[mrh125]

yea totally, and you can use med school loans to buy your first ferrari