Med school student loan to buy a car?

[pmpharmtech]

Okay, so I'm going to be starting med school in August 2006. I'm in the preliminary part of researching about medical school loans. Someone told me that med students can borrow as much as they need. She said that she plans on borrowing an extra $20K to buy a new car while she is in school. The car I currently have is getting close to 200K miles and I honestly don't know if it will make it another 4 years. I'll be living about 4 hours away from my hometown so I want something reliable to come visit family. However, I read somewhere that the school you attend actually budgets and dictates how much money a person can borrow. Any advice, suggestions, or experience with this will greatly help out. Meanwhile I'll keep doing more research and reading. Thanks!

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[synapse lapse]

Just like undergrad, you can only borrow up to the expected cost of attendance, a number the school determines. You cannot borrow school loans beyond this amount. Now most schools allow plenty enough for you to make a car payment if you needed to with (on a $20k car probably) but you won't just have 20k sitting around (though you can save for 2-3 years and have it.

 

[JonnyG]

Officially car payments cannot be factored into the cost of attendance of a school. You have to hope that the airing they do in your favor will cover the payments

 

[synapse lapse]

Officially car payments cannot be factored into the cost of attendance of a school. You have to hope that the airing they do in your favor will cover the payments

Yeah sorry didn't explain that well, assumed OP had done this in undergrad. They come up with number which includes all expenses you are allowed, and usually they are lenient as they can be at arriving at a limit, and you can borrow up to that cost. Just like udergrad except stafford limits higher ($38,500 a year).

 

[thackl]

It's easy to get more loan money (up to the $38.5k). I got a car and a bike with my loan $$

 

[zinjanthropus]

Officially car payments cannot be factored into the cost of attendance of a school. You have to hope that the airing they do in your favor will cover the payments

Actually, they can make an addition to your cost of attendance for a car payment - contact your financial aid officer

 

[blue2000]

Actually, they can make an addition to your cost of attendance for a car payment - contact your financial aid officer

My understanding is that the feds dictate which schools can or can't factor in a car payment into loans -- i.e. they decide whether the public transportation in the area is adequate.

I went to a private med school (in an area of the country with low cost of living) that wasn't allowed to factor car payments into our loans -- but I (and many of my classmates) paid for cars on our student loans. You won't be driving a BMW, but it should work.

Ask the school's financial aid office if they know whether students have bought cars during med school in the past -- they'll be able to give you some signals even if technically they're not allowed to factor it in.

 

[t33sg1rl]

If you buy a car for $20,000 now, then you will owe about $24,000 on it at graduation. (I picked 4% as an interest rate.)

conclusion 1: You are going to end up paying $28,000 for a car that only cost $20,000, if you pay your student loans on a ten year schedule.

conclusion 2: At graduation, you will owe $24,000 on a car that is worth $12-15,000.

conclusion 3: You will still be making car payments years after this car has gone to that great junkyard in the sky.

Why don't you buy a nice, reliable used car for $5-7,000 and pay for it out of your regular student budget WITHOUT borrowing extra? Why buy a brand new car just so people on the highway that you don't even know will think you have a lot more money than you actually do?

 

[MeowMix]

It IS true that you can probably borrow as much as you want - but that's by getting private loans, with a higher interest rate, which require a credit check.

Your federal student loans will go up to the cost of attendance (set by the school), with a max of about $38,700 per year, and a lifetime max of about $200,000 that includes your undergrad loans. Car loan payments cannot be included in this amount, but there are ways around it.

You can almost certainly find private loans for a car. But I agree with the above poster who recommended spending as little as possible for a reliable car. The less debt, the better. Most loan-repayment programs for working in high-needs areas will only cover a max of $20-30,000/year. Paying off these debts will put a big financial burden on your shoulders.

 

[ShyRem]

You may be better off taking your car to an outstanding mechanic (or if you have the time, giving it to a tech school for a student complete re-do - cheap and outstanding work) and getting it put back into shape. I usually take care of my own cars, and the last one I got rid of had almost 750K on it. And worked like a dream (it was just too small). We usually keep our cars 10 years or more. Maintenance. It's all about the maintenance.

Yes, the bill may give you heart failure and syncope. But a $5K bill is better than $20K car payment.

 

[PlasticMan]

You may be better off taking your car to an outstanding mechanic (or if you have the time, giving it to a tech school for a student complete re-do - cheap and outstanding work) and getting it put back into shape. I usually take care of my own cars, and the last one I got rid of had almost 750K on it. And worked like a dream (it was just too small). We usually keep our cars 10 years or more. Maintenance. It's all about the maintenance.

Yes, the bill may give you heart failure and syncope. But a $5K bill is better than $20K car payment.

Amen to that. As long as you maintain, cars will go a long way. Most people sell them or trade them in long before they would die. I got a 91 Toyo with 162k on it and plan on pushing it past 200k. Just did alot of work on it last summer at 130k, and it's running great.

 

[little_late_MD]

To the OP:

You live in New Mexico. Buy a motorcycle. You can get a brand new one cheap, or a used one even cheaper. They're dependable, affordable, and good on gas (unless you get a crotch rocket).

 

[CristaGalli]

You may be better off taking your car to an outstanding mechanic (or if you have the time, giving it to a tech school for a student complete re-do - cheap and outstanding work) and getting it put back into shape. I usually take care of my own cars, and the last one I got rid of had almost 750K on it. And worked like a dream (it was just too small). We usually keep our cars 10 years or more. Maintenance. It's all about the maintenance.

Yes, the bill may give you heart failure and syncope. But a $5K bill is better than $20K car payment.

cost of maintenance is what drives people to trade in cars and get new ones. Its not that we dont know that cars can be driven until they literally die....we just dont want to have to catch the bus for a whole week because the car is in the shop.
I personally have a solid car that i would like to trade in to get a better car that would last me for 4 years. I would be paying about $7000 more after i trade in my car. So i am not too worried about taking an extra $7000 to get a stronger, newer, and more reliable car.

 

[mjl1717]

Taking the car to the tech school to be fixed sounds inexpensive but funny its like do you rather see a 1st year med student or an attending.
Second -For all that you've been through, the studying, pressure, small social life, tortuosity, endurance, running, possibly loving debt, able to do the cranial nerves and kreb cycle backwards and forwards,willing to be controlled by insurance companies and increased public awareness I say just go out and by a new 4th generation SAAB CONVERTIBLE with a wind deflector-cause you deserve it!

 

[dara678]

you know what, my school didn't let me borrow more than the expected cost of attendance. i asked for more from T.H.E. but they said the school only allotted me such an amount and thus I couldn't get anymore. [and this was private loans from T.H.E.]

anyhow, i do know that at my school there is a credit union with good rates for car loans for students. if the private loan thing doesn't work out, you should look into your school's credit union or any bank affiliated with the university to see if they over such programs for medical students.

 

[nebrfan]

I think some people need to live like the STUDENTS that they are...I know if (when?) my car craps out that I'll be strapping snow chains onto my bicycle tires!

 

[Museless]

The pesky fine print in your student loan paperwork includes the clause that borrowed funds will only be used for tuition and 'necessary expenses directly related to attendance' or something like that.

Getting caught in something like this would lead to a world of hurt! I wouldn't do it.

 

[Blade28]

You can't borrow more than necessary simply to pay for other expenses.

That would be taking advantage of student loans' low interest rates, which are supposed to be for education and education-related expenses.

Otherwise, everyone would be using them to pay off higher-interest-rate loans (credit cards, personal loans, even car payments).

 

[EM Junkie]

I think some people need to live like the STUDENTS that they are...I know if (when?) my car craps out that I'll be strapping snow chains onto my bicycle tires!

I hate it when people have this logic. We worked our a55es off getting into medical school; and while our undergrad friends are buying houses, cars, and such we are supposed to live like frickin' Mother Teresa? No thanks!

I am an MS4 and have purchased 2 new cars in med. school (for my wife and I). She is a retail store manager, not exactly raking it in.

It all depends on what you think is important to spend your money on. I personally want my wife to be safe and in a reliable car. I don't want her breaking down in the middle of nowhere while I am on a long call shift at the hospital!

To the OP, you are allotted a max. amount of money, which technically can NOT be used for debt payment. Altough they do say a portion of it is used for "transportation." You can get private loans though, or just work your payment into what the school gives you. There is a lot of fudge room in there.

-Scott, MS4

 

[ToxicFugu]

I personally want my wife to be safe and in a reliable car. I don't want her breaking down in the middle of nowhere while I am on a long call shift at the hospital!
-Scott, MS4

I agree with this. I go to a place where it snows a lot. The roads can be slippery and a minor fender bender in a dry climate can turn into a serious accident on an icy road. If you can afford it, get yourself a safe, reliable car. It's quite practical no?

To the OP. If I were in your position, I'd put a down payment on an affordable, reliable car and use part of my student loans for the payments. If you share an apartment then you should have enough money left over for this. I know plenty of people who've done this and no one has ever gotten in trouble for using their loans on "non-academic expenses." Plus, I (or a lawyer) could easily justify transportation as being part of the cost of attending med school. We've got rotations at several different hospitals throughout the city. If you rely on public transportation you might be late a lot and lose a lot of studying time.

There are some car manufacturers out there that offer 0% APR for 60 months. Mitsubishi had that offer over the summer. Nissan had it a while back. They may still have it. So long as you have decent credit you sould qualify.

Let us know what you decide.

 

[pmpharmtech]

Wow! This topic really got alot of debate going on. Anyways, thanks to all who replied! I've asked a couple of graduate health students and they said that a vehicle could be considered an educational expense, given that it is needed to get to classes and other school related requirements. I've still been tossing the idea around, and just trying to figure out if I can afford it with what the school alots. I'm an avid bike rider so I'm sure I will be utilizing that to save on the expense of gas. I also feel like some of you guys, that I have busted my a$$ to get to this point and just want something reliable, especially to be able to drive four hours to go home once in a while to see my family. I'm not the most automoblie inclined person, so learning how to do more than the regular maintainence, doesn't really interest me. Thanks again, and I'll keep you posted.

 

[Doctor Bagel]

i'm going to have to buy a new car before starting school. my current car has lasted more than 10 years and has about 150k miles on it, so it's time for something new. as busy med students who are going to have travel all around at weird hours during our clinical years, a car is going to be a must in in most cities. as for funding it, most schools seem to allot around $2500 for transportation expenses. after that, i think you just have to spend a little less on other allotted expenses to shift money to the car payment.

i think buying a $20k car is a bit excessive, but it's perfectly reasonable to pick up a $13k car.

 

[Fermata]

i'm going to have to buy a new car before starting school. my current car has lasted more than 10 years and has about 150k miles on it, so it's time for something new. as busy med students who are going to have travel all around at weird hours during our clinical years, a car is going to be a must in in most cities. as for funding it, most schools seem to allot around $2500 for transportation expenses. after that, i think you just have to spend a little less on other allotted expenses to shift money to the car payment.

i think buying a $20k car is a bit excessive, but it's perfectly reasonable to pick up a $13k car.

A reliable used car is more affordable and a better investment than most on here presume it to be.

 

[SanDiegoSOD]

Wait until GM offers another one of those crazy "employee pricing" deals and swoop up a good new car for 20% off. True, American cars are crappy in the long run, but if you decide now to hang onto the car for five years or less, any problems over the next few years will be covered by warranty. After that time you can offload that car and get a real car when you're making some $$$.

 

[Fermata]

rue, American cars are crappy in the long run, but if you decide now to hang onto the car for five years or less, any problems over the next few years will be covered by warranty. After that time you can offload that car and get a real car when you're making some $$$.

You mean in residency....?

 

[mjl1717]

Wait until GM offers another one of those crazy "employee pricing" deals and swoop up a good new car for 20% off. True, American cars are crappy in the long run, but if you decide now to hang onto the car for five years or less, any problems over the next few years will be covered by warranty. After that time you can offload that car and get a real car when you're making some $$$.

ON the serious side:
Those warrantys go fast-seems like they're gone after only 2 or 3 years depending on how many miles is done per year. Id say since Hundai is fighting hard to compete with Honda. Id go with Hundai since the warranty is 10 years or 100,000 miles. And if the treads are more then halfway worn, buy 2 or 4 new tires. Also dont buy anything more then 2 years old.!
Addendum- Thats what I like about the forum. You can get quick responses.
Especially on a topic like a vehicle since we are in a very mobile society. And we are dependent on our cars. Also cars supposedly give "appeal" which is the least of your worries when one is a med student. So objectively put pride and ego to the side and just be practical. Let us know what you do.

 

[angietron3000]

By a used Honda, they last forever. My last car was an '87 accord with over 250k miles on it when it finally died. Spent very little time in the shop before it finally kicked the bucket. I ended up buying a new honda after that rather than spending more to fix it than the thing was worth.. I figure this new car will last me through school, residency, and probably even my first few years on the job..