Car payment on student loans

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I can. I just found a place that had cheaper rent so I can afford to pay for my car....however, it's much more than $250 a month lol.
 
C@lidoc said:
I can. I just found a place that had cheaper rent so I can afford to pay for my car....however, it's much more than $250 a month lol.
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haha what do you pay? that $250 wasn't including insurance, but just trying to gauge what I can realistically afford to spend a month here
 
DoctorLacrosse said:
haha what do you pay? that $250 wasn't including insurance, but just trying to gauge what I can realistically afford to spend a month here
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$390 and $180 in insurance. My school gave us a very generous estimated COA.
 
for full coverage insurance that insurance sounds high but not insanely high, that car payment though... :O do you drive a lexus? haha
 
damn, if people are able to manage paying that much maybe I should go for the BMW hahaha
 
Just know a $250 car payment is not really $250. It's $250/month with capitalized interest. That's an expensive Corolla or Civic :laugh:
 
xBODOMx said:
And a 500 to 1000$ repair on a junker is the same. Irrelevant argument.
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This is my dilemma... should I keep my current car (no car payments at all but it can be a bit costly to maintain) or buy a new (to me) one? I would have about 2000k saved for any repairs I'll incur in school set aside so I don't use loan money for that, but I am wondering if it will just beneficial to trade it in and use that money for a down payment.
 
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It wouldn't be bad to have a car that can last you at least 8 years for med school and residency... A 2012 corolla or civic might do it..
 
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xBODOMx said:
I think it depends how much you'll be commuting to school, and may even later, your rotations. If it is somewhat far, it's probably worth it to just buy a car. It can last you through all of school and residency. No need to make things harder and try to save (probably small amounts of) money by keeping a beater. You wouldn't want to miss a test or be late to first day of rotations due to car issues.
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Makes sense. I'll most likely be living on campus for preclinical years. There is also the option of rotations in a city with public transportation (and moving there for those years).
 
drmak89 said:
Makes sense. I'll most likely be living on campus for preclinical years. There is also the option of rotations in a city with public transportation (and moving there for those years).
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I love that our thought process is the same since well be attending the same school lol. I believe I'll be trading in my current car in order to lease a new car. this will prevent me from having any issues and I can either get rid of it if I don't need it for rotations, or trade it in and get another new one for clinical years.
 
DoctorLacrosse said:
I love that our thought process is the same since well be attending the same school lol. I believe I'll be trading in my current car in order to lease a new car. this will prevent me from having any issues and I can either get rid of it if I don't need it for rotations, or trade it in and get another new one for clinical years.
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Sounds pretty cool to read that! Haha. But yeah if I trade it in, I will probably finance a CPO car. Something small so payments aren't insanely high.
 
Save money and don't buy/lease something expensive. I know you get this advice time and again but paying with student loans just really costs you a lot.

That 20K car cost more like 40-50K in the long run when account for the interest and opportunity costs.

I'd rather have the 50K in 8 years than the 20K now...but to each their own.
 
link2swim06 said:
Save money and don't buy/lease something expensive. I know you get this advice time and again but paying with student loans just really costs you a lot.

That 20K car cost more like 40-50K in the long run when account for the interest and opportunity costs.

I'd rather have the 50K in 8 years than the 20K now...but to each their own.
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I think of this and this is why I want to hold onto my car until it absolutely craps out on me. But the prevailing wisdom is to dump it for something newer.
 
DoctorLacrosse said:
So I'm an incoming M1 at an allopathic med school, and like many others, I will be living entirely on loans throughout med school.

my question is about making my car payment on my student loans. will I be able to swing $250 a month for my car payment based on the amount budgeted by the school, or am I just way better off getting rid of the car and maybe buying a cheap junker to get through school. I ask because I basically need a car at my school, so I'm trying to figure it out. any input would be appreciated. thanks peeps
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You should absolutely be able to swing it. I expect your budget has a line for "transportation" costs? My school budgets $502/month for transportation (on top of the overly generous food/misc/rent).

Of course saying you have access to the money doesn't mean you should spend it... but having a reliable car is awfully important in medical school.
 
I looked into this same thing when I started medical school (and again when I started residency). Buying a new car is really expensive--unless you have a lot of money, the far smarter way to go is buy a quality used car. I don't get why the prevailing wisdom is to buy a new car--that just isn't something that you should ever do when you're living off loans. There's always other options out there--live within walking distance of your school/hospital, bike, use public transportation, carpool, etc. Generally you will still need a car in medical school, but usually not until 3rd year.

Unless you current car is having major issues, I'd recommend keeping it. I kept mine, and having had no car payments now for 6 years is great. It's a 2002 with 170k miles on it--so while it's not really old, it's still aging and has quite a few miles on it. Remember that you're going to get a really lousy car loan considering you have no income, and you're using federal loans to pay that loan off. So you're buying a car with a really high interest rate, and a very long loan term-it's a terrible move financially speaking.

All cars will have issues. If your current car isn't having a ton of issues and you do regular maintenance, it may even be less hassle than a new car. Generally you should assume about $1-2000 in car maintenance/upkeep a year. Some years will be less, other years will be more if you have a major problem, need to get your brakes done, new tires, etc.

Keep in mind as a medical student you're also not considered "essential," so if your car breaks down and you miss a day of a rotation, residents/attendings either won't care or will be very understanding. Happened to me one AM as a resident--the attending told me to just take my time with things and he, the senior, and other intern would handle rounding. Of course I had a really friendly and supportive team. I've had attendings come in very late due to car troubles--buying a new car/having an expensive one isn't a guarantee against car troubles.

Unless you don't have a car, or your car is really on its last legs, a new car/new-used car just isn't something that should be on your mind as a medical student, at least in my opinion.
 
Buying anything <3 years old or leasing just doesn't make sense when you are already broke.

Find something 2000-2010 or so in your price range (JUST FREAKING PAY CASH... stop spending so much at the bar, on your (probably) underused data plan, cut cable, give up your evian habit, etc and save up).
 
I think leasing a brand new car is a good option. You can def get a lease on a decent car for <200 with 0 down. I personally don't think saving a few thousand dollars is worth the headache of a car breakdown and potentially getting stuck somewhere when you have a meeting with an attending, class, a test, or something like that. Keep in mind that the 10k you saved is going to mean nothing in 10 years when you're making 250k+
 
Merely said:
I think leasing a brand new car is a good option. You can def get a lease on a decent car for <200 with 0 down. I personally don't think saving a few thousand dollars is worth the headache of a car breakdown and potentially getting stuck somewhere when you have a meeting with an attending, class, a test, or something like that. Keep in mind that the 10k you saved is going to mean nothing in 10 years when you're making 250k+
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^^This. A friend leases a 2014 prius for around 150/mo with a lease-to-buy option after 3 years. After insurance and gas she's only paying about 275-300/mo total on it. Not a bad deal considering if it needs repairs she doesn't have to pay and can walk away no strings attached after three years if she wants to.
 
Stagg737 said:
^^This. A friend leases a 2014 prius for around 150/mo with a lease-to-buy option after 3 years. After insurance and gas she's only paying about 275-300/mo total on it. Not a bad deal considering if it needs repairs she doesn't have to pay and can walk away no strings attached after three years if she wants to.
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Wow, can you really get a lease for that cheap? And not a ton of money down? This is making me rethink pouring money (not to mention gas) into my ailing Cadillac CTS...
 
I just got a lease on a brand new honda accord lx for 200/mo no money down. It's a beautiful car and is more than I need at this point, and it comes with no hassles as it's completely reliable.
 
New cars are one of the worst investments out there. The moment you leave the dealership it drops in value significantly. I know you don't want to hear this but when you have 0 income, under 99% of the circumstances it makes no sense whatsoever to buy a new car. Buy a used one and live with the risk, just like most of the population vs. accruing insane debt.

If you have a car that is breaking down you can still buy a used car for under $5k. Whooping out 18k+ just to have a guaranteed perfect car for medical school is absolutely overkill and since you are buying it on credit, and paying that credit off with student loans which have an ~8% interest rate -- this is astronomically dangerous. This guy put it much better: http://whitecoatinvestor.com/quit-buying-cars-on-credit-15-reasons-to-pay-cash/
 
Croaker said:
New cars are one of the worst investments out there. The moment you leave the dealership it drops in value significantly. I know you don't want to hear this but when you have 0 income, under 99% of the circumstances it makes no sense whatsoever to buy a new car. Buy a used one and live with the risk, just like most of the population vs. accruing insane debt.

If you have a car that is breaking down you can still buy a used car for under $5k. Whooping out 18k+ just to have a guaranteed perfect car for medical school is absolutely overkill and since you are buying it on credit, and paying that credit off with student loans which have an ~8% interest rate -- this is astronomically dangerous. This guy put it much better: http://whitecoatinvestor.com/quit-buying-cars-on-credit-15-reasons-to-pay-cash/
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I think most of us agree about buying new, but are saying leasing for very cheap with $0 down is a good option.
 
johnamo said:
Wow, can you really get a lease for that cheap? And not a ton of money down? This is making me rethink pouring money (not to mention gas) into my ailing Cadillac CTS...
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I don't think it's typical, but the deals are out there. A different dealership near me is now leasing 2012/13 Volkswagens for $97/month zero down. Idk how long that lease is, but I'd guess there are some strings attached.
 
baxt1412 said:
Buying anything <3 years old or leasing just doesn't make sense when you are already broke.

Find something 2000-2010 or so in your price range (JUST FREAKING PAY CASH... stop spending so much at the bar, on your (probably) underused data plan, cut cable, give up your evian habit, etc and save up).
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The only thing that sucks about cable (a huge expense) is it's tied to the internet packages for me. I would love to pay for just internet, but with Comcrapstic being my only provider it is somehow cheaper to bundle it with cable+internet rather than paying just for internet. 😵
 
darklabel said:
The only thing that sucks about cable (a huge expense) is it's tied to the internet packages for me. I would love to pay for just internet, but with Comcrapstic being my only provider it is somehow cheaper to bundle it with cable+internet rather than paying just for internet. 😵
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Yeah, it's the same in my area. And the low speed plans are so close in price to the high speed that it's pretty pointless not to get the faster "bundled" package. At least I won't have to do shady stuff to get GOT anymore, since HBO is included in all their packages. 😉
 
I'm juggling with the idea of leasing a new car or buying used again. I bought a used '99 VW Jetta about 6 months ago on a terrible deal. I needed a car fast because I had a med school interview coming up and I needed to get back to my college town. It has been nothing but trouble since and I'm scared to even drive it for fear of it breaking down and costing me >$500 in repairs (VWs are expensive to work on). I'm not sure whether to buy a used Honda for 6-10k (on a car loan through parents) or to use that same money and lease a new Honda. The low monthly payments for leasing are enticing, but the fact that at the end of the 3 years, you don't own anything makes leasing a much worse deal. Whereas if you put those same monthly payments to a used car, at the end of the 3 months you own a car worth however much (2-4k). With all the mechanical trouble I've been having with this P.O.S. now it's almost worth alleviating any worry by leasing a new car.

As mentioned, it's unfortunate that we're faced with loans at >7%, meaning that buying a 10k car now is likely going to cost us 2-3x that in the long run. I'm at a crossroads.
 
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Hrdrock said:
I'm juggling with the idea of leasing a new car or buying used again. I bought a used '99 VW Jetta about 6 months ago on a terrible deal. I needed a car fast because I had a med school interview coming up and I needed to get back to my college town. It has been nothing but trouble since and I'm scared to even drive it for fear of it breaking down and costing me >$500 in repairs (VWs are expensive to work on). I'm not sure whether to buy a used Honda for 6-10k (on a car loan through parents) or to use that same money and lease a new Honda. The low monthly payments for leasing are enticing, but the fact that at the end of the 3 years, you don't own anything makes leasing a much worse deal. Whereas if you put those same monthly payments to a used car, at the end of the 3 months you own a car worth however much (2-4k). With all the mechanical trouble I've been having with this P.O.S. now it's almost worth alleviating any worry by leasing a new car.

As mentioned, it's unfortunate that we're faced with loans at >7%, meaning that buying a 10k car now is likely going to cost us 2-3x that in the long run. I'm at a crossroads.
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I can agree with this. your head is in the right place, but unfortunately at the end of the day many of us need a reliable car and there's no way around it. it sucks that it's going to cost us so much in the long run, but I've had crap beater cars all my life and I just don't want the headache for this chapter of my life.

leasing provides an affordable way to have a brand new, reliable car. it sucks you don't own anything, but in reality buying an old used car gives less security and you'll be losing a lot of money on the deal however you look at it (example: I bought a $5k used car years back, put thousands in maintenance and repair into it, and i got $2k when I sold it. at least a lease there are no major repairs to worry about).
 
DoctorLacrosse said:
I can agree with this. your head is in the right place, but unfortunately at the end of the day many of us need a reliable car and there's no way around it. it sucks that it's going to cost us so much in the long run, but I've had crap beater cars all my life and I just don't want the headache for this chapter of my life.

leasing provides an affordable way to have a brand new, reliable car. it sucks you don't own anything, but in reality buying an old used car gives less security and you'll be losing a lot of money on the deal however you look at it (example: I bought a $5k used car years back, put thousands in maintenance and repair into it, and i got $2k when I sold it. at least a lease there are no major repairs to worry about).
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That's what I'm leaning towards. I don't really want to finance a used car over 10k, which means I'd likely be looking at a mid 2000s used car. Maybe get it for 8k or so, plus at least 1k for necessary initial maintenance (after all, that's presumably why the last person sold it). Then after several years it's going to be worth 2-4k at most like you said. That same money could have been spent driving a new car on a lease.

I drove a '94 Honda Accord for 5 years or so from 240k-300k miles with <$1000 in maintenance (not counting routine oil changes, etc.). I don't know if I'll get that lucky with a used car again.
 
Hrdrock said:
That's what I'm leaning towards. I don't really want to finance a used car over 10k, which means I'd likely be looking at a mid 2000s used car. Maybe get it for 8k or so, plus at least 1k for necessary initial maintenance (after all, that's presumably why the last person sold it). Then after several years it's going to be worth 2-4k at most like you said. That same money could have been spent driving a new car on a lease.

I drove a '94 Honda Accord for 5 years or so from 240k-300k miles with <$1000 in maintenance (not counting routine oil changes, etc.). I don't know if I'll get that lucky with a used car again.
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yeah that's the tough part, a lot is left to luck. in comparison I drove an '03 accord from 100k-160k with a TON of work needed in between. I was sold a ticking time bomb lol. I'm not willing to roll the dice again this time.
 
Leasing is consistently the most expensive way to own a car. Run the numbers.
 
baxt1412 said:
Leasing is consistently the most expensive way to own a car. Run the numbers.
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Yeah, most leases are for ridiculously low milage. If your schools clinical sites are more than a few minutes that little lease is going to balloon.
 
There is a middle ground here. I was in the same situation and decided to buy a used car. Spent 4.8k in 2007 Civic with 71k miles and everything has been going well so far... I am glad I did not lease or buy a brand new car. I don't think it makes sense to use student loan money to finance a car...
 
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Borrowing money (which is essentially what you are doing with a lease too) on one of the few sizeable assets that actually depreciate over time is what makes it dumb.
 
Didn't see this addressed but I figured I would throw in the fact that if you get a car loan and pay for it with med student loans...you are really paying interest twice (interest on the car loan, and then interest when you pay off your student loans). So I am going to reinforce the Idea that you pay cash for what you can afford right now.
 
Nontrad_DO_143 said:
Didn't see this addressed but I figured I would throw in the fact that if you get a car loan and pay for it with med student loans...you are really paying interest twice (interest on the car loan, and then interest when you pay off your student loans). So I am going to reinforce the Idea that you pay cash for what you can afford right now.
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Unless you have loans that are higher interest than the car loan. It would be better to use that cash to pay down the student loans.
 
Hrdrock said:
Unless you have loans that are higher interest than the car loan. It would be better to use that cash to pay down the student loans.
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Kind of changing the scope of the argument aren't we? If you have cash to pay off med student loans while you're in med school then you're an idiot for taking the loans in the first place...you could just pay tuition and your living costs.

If you would like to debate the completely new subject you addressed start a new thread...otherwise my point still stands for the question of having a car payment on student loans.
 
Last I checked, average indebtedness is higher than a 10k car loan. It's not changing the topic at all. It's not smart to pay cash for a car when you have outstanding loans that would be higher than the car loan.
 
Hrdrock said:
Last I checked, average indebtedness is higher than a 10k car loan. It's not changing the topic at all. It's not smart to pay cash for a car when you have outstanding loans that would be higher than the car loan.
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Assuming one has cash to outright buy a car, say 10k. If they used that money instead to pay off student loans, then they still need to borrow that cost for the car. And they still need to pay off that cost, which would be more loan money. So they negate each other, no?
 
Hrdrock said:
Last I checked, average indebtedness is higher than a 10k car loan. It's not changing the topic at all. It's not smart to pay cash for a car when you have outstanding loans that would be higher than the car loan.
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1. Google good debt vs. bad debt, and how it affects your credit.
2. The average med student is 26, and the average credit score for a 26 year old is 630 which is bad credit. At that score the chances that you can get an auto loan at a lower APR than the average student loan APR is laughable.
3. Using the average student loan debt of the class of 2015 (35k) puting 10k towards something you would still owe 25k on rather than putting that 10k towards something you could pay off outright and never pay a cent of interest on it lunacy at best.
 
Hrdrock said:
Last I checked, average indebtedness is higher than a 10k car loan. It's not changing the topic at all. It's not smart to pay cash for a car when you have outstanding loans that would be higher than the car loan.
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You are also forgetting about the fact that student loans can go on deferment while you are in school, whereas a car loan you have to pay regardless of your status as a student.
 
drmak89 said:
Assuming one has cash to outright buy a car, say 10k. If they used that money instead to pay off student loans, then they still need to borrow that cost for the car. And they still need to pay off that cost, which would be more loan money. So they negate each other, no?
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Hmmm.. you might be right actually. I wonder if the time saved collecting interest would make a difference. You have 5k left over from financial aid and you use that to pay down some of your older loans that are sitting at 7.9% vs. using them to just outright buy a car that you could have financed at 4.6%. Either way you're probably right that it's best just to pay interest on the loans once instead of twice.
 
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