Car Loans for College Students: A How-To Guide
- College students face extra hurdles getting car loans due to limited income and little or no credit history.
- Current and former college students may have access to auto loan programs and discounts through their college, bank, credit union, or vehicle manufacturers.
- A few ways to improve your odds of approval include using a cosigner, building credit or saving for a larger down payment.
In a tough market, it can be hard to find an affordable car loan, but it can be even harder for college students. When you lack financial stability and a well-established credit history, like most individuals in this stage of life, lenders may hesitate to approve you for auto financing.
However, you can take steps to improve your chances of qualifying for a car loan, even if you’re in school full-time. To do this, you can start by checking if your school partners with any financial institutions that offer car loans for students and by finding someone willing to be your cosigner.
Where to find car loans for students
School affiliations
As a student, you may find car loan options at several different places, including your bank, an online lender or a car manufacturer. But one of the best places to start looking is your school.
In some cases, financial institutions partner with schools and may provide special loan offers for students. For instance, USC Credit Union is connected to the University of Southern California (USC) and allows for enrolled USC students to become members. Members can then access financial products such as auto loans.
Banks and credit unions
Some banks and credit unions offer programs to help students finance vehicles. These college student auto loan programs — such as the college auto loans offered by Provident Credit Union — may come with flexible eligibility requirements, like low or no credit score requirements.
Credit union auto loans, in particular, tend to offer some of the lowest interest rates available. the average rate for a new car loan from a credit union with a 60-month term is 5.44%, according to the latest data from the National Credit Union Administration as of this writing. On the other hand, the rate for that same type of loan at a bank could be 7.41%.
Dealerships with car loans for students
Another way to find a car loan is by going through a vehicle manufacturer since some major car companies have special car-buying deals for students. Keep in mind that these deals are typically limited to specific vehicle models, and not all manufacturers offer student car loans.
Here are a few examples of manufacturer car-buying deals for students and recent graduates:
- Nissan College Grad Program awards a $500 cashback reward to current students set to graduate in six months or former students who graduated in the past two years when purchasing or leasing a new Nissan.
- Ford College Student Recognition Program provides current and recent college students with bonus cash of up to $500 when you lease and up to $750 when you purchase certain types of Ford models.
- Honda Financial Services offers $500 toward a down payment or the total cost of your car on certain new and used vehicles. To qualify, you must have graduated from college within the last two years or will graduate within the next six months.
- The Happy Kia First Time Buyer Program offers loans for new and used vehicles. You can qualify for one of these loans with no credit and no down payment, so long as you meet other eligibility requirements. However, you must have a monthly income of at least $2,000 — and that may be difficult for some college students to meet.
What to know about student car loans
Taking on a car loan can be a financial burden for anyone, but it’s an especially big commitment for students with limited resources. As with any car financing, students qualify based on a combination of their credit and income, as well as the amount of their down payment, all of which can make it difficult to qualify for a loan.
If you do take on a car loan, you’ll repay the funds (plus interest) in fixed monthly installments over a set repayment term. Keep in mind that choosing a shorter repayment period can save you money on interest charges but may come with higher monthly payments. Longer terms can have lower monthly payments but higher interest.
Unlike student loans and credit cards, car loans are secured with your vehicle as collateral. Therefore, students should bear in mind that if they fall behind on payments, their car can be repossessed.
While some student loans cover transportation and vehicle-related expenses, it’s generally prohibited to use student loans to buy a car. It’s also not a great idea to buy a car with a student loan since, unlike car loans, student loans take an average of 20 years to pay off. That means you could still be paying off the loan long after you get rid of the car.
Challenges of getting a car loan as a student
As a college student, you’re probably not earning big bucks, and it’s unlikely you have a long, positive credit history. As a result, these may be some of the roadblocks you face while shopping for a car loan.
Limited credit experience
There are some student car loans available for people with no credit, but as a general rule of thumb, good credit will help you to qualify for more loans with affordable terms.
Unfortunately, if you haven’t had at least one credit card or loan in the past six months, you may not have a credit report or score. Plus, if you have poor credit, it can take a minimum of 30 to 45 days to increase your scores — and even longer than that to make real improvements.
Limited income
Lenders view your income as evidence of your ability to afford a car loan payment. If your monthly debt payments (including the car loan) account for more than 50% of your gross (pre-tax) income, you might have trouble getting approved for a car loan.
High interest rates
People with no credit, low scores or financial challenges may find they can only get approved for loans with high interest rates. The average rate on a 48- to 72-month new car loan is historically high at 13.80% APR, according to LendingTree Q3 2025 data. However, the average rate for a person with a credit score between 501 and 600 is even higher, at 22.66% for new car financing.
Why does your interest rate matter? Because it can increase the cost of your loan by thousands of dollars. For example, at 8.15% APR, a $25,000 loan with a five-year repayment would cost you $5,522 in interest charges, but at 11.86% APR, the charges would amount to nearly $8,261.
Down payment
While traditional advice says you should make a 20% down payment to buy a car, you can find car loans that require no down payment. On the other hand, the more you save for a down payment, the better your chances are of being approved for a loan and the more likely you are to qualify for lower interest rates.
High monthly car payments
When interest rates and car prices rise — as they have in recent years — car payments can increase, too. In the third quarter of 2025, Experian reported that the average monthly payment on a used car loan was $532. For new cars, it was $748. By comparison, the average monthly car payment in 2024 for used vehicles was $524 and $735 for new vehicles.
How to boost your odds of getting a student car loan
If you’re motivated to shop around and compare lenders, and you’re flexible about the car you buy, you can improve your chances of getting a car loan. Here are the ways a student can qualify for more and better loans.
Consider a cosigner
A cosigner is someone who agrees to take full, legal responsibility for your loan if you can’t pay it back. By offering to put their money and credit on the line, a cosigner on an auto loan can help increase your chances of being approved.
Build your credit
You might need a few months or more to improve your credit scores before you can get approved for a loan. Here’s what you can do to give your credit scores a jump-start:
- Pull all three of your free credit reports from sites like AnnualCreditReport.com. If you find any mistakes in your credit report, you can dispute credit report errors with the credit reporting agency.
- Ask a loved one with good credit to add you to their credit card as an authorized user. This allows you to improve your score over time by piggybacking off the primary cardholder’s established credit line and solid payment history.
- If you’ve had a credit card for at least a year and your scores have improved since you opened it, ask your creditor to increase the card limit.
- Pay down your credit card balances as much as possible. This can help cut down on your credit utilization ratio and boost your score.
- For students with no credit, apply for a student credit card. While these cards generally have lower borrowing limits, they also come with flexible eligibility criteria.
Save up for a larger down payment
Making a bigger down payment can help you qualify for an affordable loan. That’s because you can borrow less money, reduce your monthly payments and save money on interest payments. To do this, you may need to borrow from family or friends to put more money down or take some time to save extra cash.
Choose a cheaper car
Another way to reduce your loan amount and monthly payments and improve your shot at qualifying for a loan is to find a smaller car loan. In the past, a car with more than 100,000 miles was considered over the hill, but modern cars can be reliable past the 200,000-mile mark as long as they’re well maintained.
Research discounts and rebates
Scoring a discount or rebate from the lender or car dealer could be the key to making your loan affordable and getting approved. Check with your local credit union or current bank to see if they have discounted car loans for students, discounts for having good grades, or if you can get a rate reduction by setting up automatic payments on the loan.
Some car manufacturers also offer discounts for students or first-time car buyers, but they tend to vary by location, so take the time to do your research and see what’s available.
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