Typical Rates for Student Car Loans

Student car loans tend to have higher rates than less risky loans. Lenders know that students do not have salaries, and many students also have short credit histories. As such, the lenders will protect themselves by setting higher rates. You may be able to get lower rates by exploring these options:

  • Use a cosigner - While not ideal, a cosigned loan can be much more affordable. You will not get the same credit benefits when you pay off the loan. If this is the only way you can afford the financing, though, it is a better option than taking a loan you cannot afford.
  • Consider variable rates - Variable rate loans are extremely risky. They allow you to make low payments now in exchange for the promise of high payments in the future. Many students think they will find a salary immediately upon graduating to help them with the higher loan payments. This is not always the case, and thinking like this can lead to defaults. To protect yourself, make sure you have a large emergency fund. You can also try to build in limits to how high the payments will climb once the rates adjust.