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student loans and new car loan...advice please!

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meagan
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student loans and new car loan...advice please!  Reply with quote  

I am a masters student who is in need of a car. I am looking for a used one but I am still applying for a car loan. I need some advice as to how to fill it out. Should I list my student loans as income (since they are not due yet as I am still in school), or should I list them as a debt? What would make me appear more financially stable on paper? Without the loans, I will still have help from my family to pay the car payment so I am not concerned about being able to make the payment, but I wonder if $50,000 in loans will make a lender a little nervous. Does anyone have any advice or information as to what would be best? I have about $6000 as a downpayment and I'm looking to finance about 10-15K. I would look for something even cheaper, but my commute to school is 100 miles roundtrip. I really and truly cannot afford to have an unreliable car for the next year!
Post Thu Jul 07, 2011 10:21 pm
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oldguy
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quote:
but I wonder if $50,000 in loans will make a lender a little nervous. Does anyone have any advice or information as to what would be best? I have about $6000 as a downpayment and I'm looking to finance about 10-15K. I would look for something even cheaper, but my commute to school is 100 miles roundtrip. I really and truly cannot afford to have an unreliable car for the next year!


The lender's main concern is the ability to repay - ie, you income stream, and how reliable that income is. No, don't list the student loans as income. If you don't have an income, they will insist on a co-signer.

It might be better to use the $6000 to buy a $6000 reliable car. The makeup of safety/reliability of a car is mostly the tires, brakes, battery - they account for over 90% of the AAA road calls. You can replace all 3 for under $1000. Modern cars (especially japanese) provide about 200,000 miles of troublefree service - you can probably find one at about the half-life.
Post Fri Jul 08, 2011 2:29 am
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meagan
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I do also have income, as I am working at a hospital for $25/hr part time. However, with the additional car loan, I believe I would be over the 40% of income:debt, but this would not be the case if I were done with school and working full time. So, do I list the extra money my family is going to give me for the car payment as income and put the loans down as debt?

I have been reading up on consumer reports and checking the for sale by owner section of Craigslist and Autotrader almost daily. I haven't seen any low mileage cars (honda civic or fit; toyota corolla or matrix; scion XA or XD) for $6000 unless its a salvage title or nearly 10 years old. I understand the "live within your means" argument that you are making, but in my opinion a $6000 car will end up being just as costly if not more in the end in terms of time (missed class due to car problems, car being in the shop) and money (lower MPG, repairs, etc.).
Post Sat Jul 09, 2011 1:00 am
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oldguy
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but in my opinion a $6000 car will end up being just as costly if not more in the end in terms of time (missed class due to car problems, car being in the shop) and money (lower MPG, repairs, etc.)


LOL - sounds like you have been talking to a car salesman, those are all of the usual 'reasons' why you should buy a new car. Not sure what you mean by 'low mileage', like I said 100,000 miles is about the half-life of a modern car. And that will be typical for a $6000 car. And emergengy car problems, the kind that cause you to miss class or work, are almost all tires, brakes, batteries. If you renew those every 3 or 4 yrs (also necessary on a new car) you won't be stranded.

Late model cars depreciate at about $5000/year - I doubt that any car will have that many mechanical failures.

PS - I hope you are wrong about breakdowns, we are driving the Alaskan Highway next month - and our car has 105,000 miles on it.
Post Sat Jul 09, 2011 2:04 am
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meagan
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so getting back to the original topic, you are saying that the best way to fill out my loan application is to list my income from my job as well as the money my family will be giving me as income. do i even need to list the student loans as a debt if i am not paying on them yet?
Post Mon Jul 11, 2011 5:19 pm
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oldguy
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you are saying that the best way to fill out my loan application is to list my income from my job as well as the money my family will be giving me as income. do i even need to list the student loans as a debt if i am not paying on them yet?


List only your earned income - the 'gifted' amounts won't be considered. And yes, list the debt. It is a liability that you owe, regardless of the repayment terms. (Besides, it will be exposed during the credit check/discovery process - and your failure to list it will be cause for immediate rejection.)
Post Mon Jul 11, 2011 8:36 pm
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hallowentail
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Student Car Loans  Reply with quote  

The interest rates associated with bad credit student funding will tend to be slightly higher than interest associated with no credit student loans. No credit loans to slightly higher interest rates for student with good credit.
Post Mon Jul 11, 2011 9:08 pm
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littleroc02us
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When did student loans ever become income. That's a joke right? Smile It's a debt just like any other debt. Do you have any income? If I was a lender I wouldn't loan money to someone who couldn't pay it back. If you have 6k why not save up 4k more and pay cash for a 10k used car that has low milaege. I paid cash for a 2007 Mitsubishi Galant with 49k on it with a 100,000 warranty back in 2009, which we paid 10k for everything and it's been a wonderful, reliable car.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Tue Jul 12, 2011 1:21 pm
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jeniferdocks
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They have to talk to the lawyer handling the estate as well and will have to file certain documents with counsel and with the Probate Court.
Post Wed Jul 27, 2011 9:05 pm
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Benstoke
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