In order to get an accurate picture of the price level, you can now look around at different dealers, look at models, weigh them up and make a shortlist. It is only when there is clarity about what kind of vehicle it should be that you start to think about the type of financing.
As a rule, the banks only grant their loans to borrowers who can demonstrate regular income from permanent employment that is higher than the seizure allowance, which is currently 1,000 USD. However, such payments as Federal Aid, child benefit or maintenance are not counted as income. However, most trainees’ training allowances are well below 1,000 USD, and very few students have a part-time job that guarantees them a higher income. The best solution in such cases is when the loan application is made together with a guarantor – this can be the parents or grandparents. If the guarantor fulfills the requirements for a loan, a car loan is also possible for students and trainees.
It doesn’t have to be a new car
For students and trainees, buying a car is not about prestige or status symbols. They need a mobile pedestal that reliably takes them from A to B, so that usually a small used vehicle is to be financed, which may cost less than 5,000 USD to buy. The loan amount is correspondingly low. If parents or grandparents are not suitable as a guarantor because they have their own obligations or are otherwise not creditworthy, there is also the possibility of mortgaging a possibly existing life insurance and thus financing the car.
By the way, students and trainees have better chances if they finance directly from the car bank and make a correspondingly high down payment on used cars. If there are no savings, you can borrow money from relatives or friends. Final installment financing for a used car is also an interesting option. Here the loan costs are somewhat higher, but the monthly rate is so low that it can be paid from the low income.
The student loan as an alternative for students
Student loans are granted by the Lite Lender with state funding to enable students to make a living on a monthly basis. In contrast to classic installment loans, the amount of a student loan is not paid out in one sum, but in monthly installments. Repayment of the loan does not have to start until after completing your degree. Additional security does not have to be provided by the students.
The student loan can then be used, among other things, to pay the monthly installments for the vehicle. This is an option that makes students financially flexible. However, the car loan is then financed with another loan, which should be considered carefully because you then start your professional life with relatively high loan commitments.
Car finance for students and trainees
The assumptions for car financing are different from those for normal installment loans, so that despite a much lower disposable income, a car loan is not completely excluded from the outset.
How students and trainees get car loans
Both students and trainees are at the very beginning of their professional careers. Nevertheless, it can be important to have a mobile base in order to reach the training place or the university in a reasonable time. As a rule, the car banks in particular have an open ear for the needs of students and trainees and therefore also grant the car loan to said groups of people if, for example, they can provide additional security in the form of a solvent guarantee. An exorbitantly high down payment can also make it possible for a trainee who does not have attachable income to get his car loan even without a guarantee, especially since the vehicle registration document also has to be deposited as additional security.
What students and trainees should pay attention to
Especially if the budget is particularly tight, you should already think about what kind of vehicle should be financed in advance. As a rule, it is an inexpensive used vehicle that can be financed with a correspondingly good down payment and a correspondingly long term at rates of less than 100 USD.
Students and trainees should therefore ask their relatives in advance who would be willing and able to enter into the contract as a guarantor for the car loan. Of course, this should not be 80-year-old grandma or 85-year-old grandpa, because then the problem of biological risk would again arise. The banks are happy to have parents as guarantors or older siblings with a correspondingly good income.
OUR TIP – you should only act as a guarantor if you do not intend to take out a loan in the foreseeable future, because otherwise there could be problems at the latest.
For students and trainees, the car is not a status symbol, but a means of transport that can be used to get from there to there and vice versa. You can get small used ones for just 1,000 or 2,000 USD, so that you may not have to take out a loan from the bank, but rather have the money borrowed or given by grandma and grandpa.
If credit financing is to be used, the chances for students and trainees at the auto banks are greatest. As an alternative to the classic installment loan, final installment financing is often offered there, with which it is possible to keep the installment particularly low so that it can be paid even from a very low disposable income.
Beware of over-indebtedness
Especially at a young age, you should make sure that you don’t overdo yourself financially. Young people tend to spend more money than they have. The lives of young people and students are expensive. For example, if you already finance your studies with a loan, you should better avoid a car loan during this time.