How to Get a Student Car Loan?

By Angela Monroe - May 13, 2019

No matter what your reason is for wanting to have your own set of wheels–whether it’s because you’re sick and tired of the daily commute on public transport or simply want to impress your classmates–YES, you can get a car loan as a student.

Unlike a student loan which is mainly designed for tuition fees, a car loan is exclusively intended for buying a new or used vehicle. Because of little or zero credit history, you may find it hard to get approved for a car loan. Even so, there are ways to secure car financing.

These include:

Getting a Co-Signer

A co-signer with a full-time job or regular source of income and a high good credit score increases your chances of loan approval.

Co-signers are people who are willing to vouch for your ability to pay the loan on time and willing to assume partial accountability over your loan. Unlike co-borrowers, however, they do not hold an equal share of the property.

By affixing their signature on the loan contract along with yours, co-signers accept the responsibility of repayment if you default. Once they’ve signed the contract, they also can’t be removed from the loan agreement unless you refinance the loan on your own. The loan also becomes a part of their credit reports, impacting their credit score and their future chances of getting approved for loans for better or for worse.

Applying for a Subprime Auto Loan

Subprime auto lenders offer a bad credit car loan for students and other high-risk borrowers with poor credit history. This type of loan requires a higher interest rate and often a large downpayment to compensate for the risk of defaults. 

Like most car loans, a subprime auto loan is a secured loan. You need to put up the title of your car as collateral for the loan.

Despite the many unfavourable aspects of a subprime car loan, it can help you achieve a strong borrowing power. If you make your repayments on time, you’ll start to build your good credit history.

Getting An In-House Financing

You can get a car loan from dealerships through a “Buy Here, Pay Here” scheme. Instead of borrowing money from a bank or a lender, you get the car directly to the dealership.

However, there are several disadvantages of in-house car financing, including:

  • high-interest rates
  • large down payments
  • limited car selection
  • high chance of repossession

You might not also improve your credit score even with on-time monthly repayments because they are not usually reported to the credit bureaus.

Leasing Your Car

Vehicle leasing works just like a car rental in which you pay to use the car, although for a longer period of time (usually two to four years). When the leasing term is up, you have to return the car back to the leasing company or purchase it for the residual value.

While you don’t have to provide a large amount of money to drive the car, it won’t become your property. You’ll pay for any wear and tear and for excess mileage limit in the leasing contract. Terminating the contract early, should you need to, is also costly.

Aside from the challenges of getting approved for a car loan as a student, it is also a huge decision. If you choose the wrong car financing, you might default on your loan payments. This would drastically lower your credit score, damaging your future loan approval odds.


At Loans For People With Bad Credit, we consider your financial strengths and circumstances to find the best car loan for you. Our team of expert brokers work with Australia’s top car loan lenders to compare and select the car loan which suits your need.

Get your Free Credit Check today to know where you stand when applying for a car loan. To get an exact quote, call us on 1300 769 384.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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