Student Car Loans
With so many cheap brand new cars arriving in Australia, more and more young people are able to buy brand new cars as their first car. But some still need a little help, especially if you are a full-time student, so are there such things as student car loans?
Not as such, but with some help from mum and dad or if a student is in stable employment earning enough to pay off a loan, a student could get a car loan for that brand new set of wheels. Many parents who offer to help their children buy a car opt for either an interest-free loan (from their own money), or they can act as a guarantor for their children on a car loan.
This may sound like a simple option but be careful, as you may not realize exactly what you are getting in to.
If your child fails to make the repayments and defaults on the loan you will be stuck with the bill, and if you can't afford to pay it, your credit history could be ruined, as well as your child's.
So before you sign up to be a guarantor on a car loan for a relative, you should ask yourself a few questions as well as asking your bank or finance company some searching questions.
Firstly, what would be the amount you would have to pay back if they were to default? Make sure you can afford to pay this, and pay it quickly, otherwise the bank could start repossessing your assets to get their money back.
What is the reason you need to act as a guarantor? Does the borrower have a bad credit history, can they not afford to pay the loan back? If so, should they really be getting a loan and will they be able to repay it?
If you've asked yourself these questions and now you are starting to re-think acting as a guarantor there are other options you have. As was mentioned earlier, some parents take on the role of the bank and offer loans to their children, others choose to help their children save by matching their children's savings dollar for dollar.
Although if you can be a guarantor and are willing to be one, it will help your child out significantly with the loan itself. When a guarantor comes on board, some lenders offer a lower interest rate - but of course you will need to check this with the bank or finance company you are dealing with.
To see some car loans available right now, visit our Car Loans Page.