In general, the student is characterized by a tight budget and unstable income. However, purchasing a car may be necessary to cover daily trips and complete higher education. It is therefore important to find an accessible and advantageous solution to finance the acquisition of a vehicle. However, students now have several interesting options in this area.
Financing the purchase of a car when you are a student: how?
In addition to cash payment, there are currently different solutions for finance the purchase of a car when you are a student. This profile can notably access LOA, LLD and car credit. The best choice in this area, however, depends on each person’s financial and personal situation. Thus, the explanations of maaf.fr are particularly useful for forming an opinion on the issue.
The candidate for financing must also measure the commitment implied by these formulas. Indeed, these are ultimately loans. The offers are distinguished only through the payment terms and associated services. Therefore, the student must assess their repayment capacity before subscribing. This measure makes it possible to avoid credit settlement incidents before the start of working life.
LOA
LOA (Rental with Purchase Option) allows you to buy a car after renting it for a period agreed upon at the start. The rental period often extends over 2 to 5 years. On the new and used market, this type of leasing is commonly offered by manufacturers and dealers. That said, it is increasingly appreciated by automotive sales professionals.
At the end of the rental period, the customer can use the purchase option by paying the final amount provided for in the contract. It is also possible to return the rented car. In both cases, the student only pays for the use of the vehicle. The rental company will then take care of the resale, if the subscriber abandons the purchase. However, this formula may involve a high first rent, a mileage fee per year and repair costs.
Auto loan
Auto credit is undoubtedly the best-known solution for finance the purchase of a car when you are a student. It allows you to immediately be the owner of the vehicle. The subscriber can therefore resell his property at any time. Instead of paying rent, he will only have to pay the monthly loan payments. Students also have access to flexible options adapted to their profiles. Concretely, these offers allow, for example, to make early or deferred payments.
Depending on the chosen interlocutor, this type of financing also makes it possible tobuy a used car. Second-hand vehicles reduce the amount to be borrowed from the start. Logically, they help limit the interest rate and repayment duration. The student must, however, pay attention to the method of calculating monthly payments to avoid overstretching his budget.
LLD
With the LOA, the LLD has contributed to the success of leasing offers from dealerships and car manufacturers. It allows you to reserve a vehicle for a Long Term Rental. Unlike the LOA, the offer does not offer to buy the car at the end of the contract. The student can then change model at the end of the rental period.
Today, LLD is very popular with young people because of the numerous associated benefits. The formula actually includes technical monitoring and vehicle repairs. However, these services have a significant impact on the cost of the contract. The same goes for the amount of the first rent. Nevertheless, the student has a vehicle at his disposal, without worrying about its maintenance and resale.
Do parents have to act as guarantors?
Given the amounts involved, young people most often needhave a guarantor for a student loan. Credit organizations can thus reduce the risk of non-payment while diversifying the profiles of their customers. In fact, the guarantor undertakes to settle the subscriber’s debts in the event of non-payment. The creditor therefore ensures repayment of the credit, regardless of the financial situation of the customer.
Conversely, guarantors are not always necessary to finance the purchase of a car when you are a student. This requirement sometimes applies to auto loans offered by banks and traditional financial institutions. For their part, automotive professionals focus more on the financial profile of potential customers. If his parents act as guarantors, the student will nevertheless increase the chances of obtaining financing.
