Driver's Guide

How to Buy a Car as a Broke College Student

Almost every college student dreams about owning a vehicle. The comfort that comes with having your own car is unrivaled; going for classes, events, trips, and other educational activities becomes easier and stress-free as opposed to taking a taxi or bus. Hitherto, owning a car used to be the exclusive preserve of “rich” college kids. But with the various student-friendly financing options available nowadays, you can buy a car as a broke college student.

Do keep in mind that you may have to beat the salesman if budgeting a new car.

How to buy a car as a broke college student

How to buy a car as a broke college student

You don’t have to be a rich college grad to own a car. With these expert tips, you should be able to make the best decision for yourself.

1. Start saving early and create a budget

Early savings are critical to being able to afford a car in college. A few dollars every day will eventually add up to a tangible amount over time.

The next step after you begin to save is to create a monthly budget with a 20% rule. This rule simply means that only 20% of your monthly budget should go toward your “car fund”.

Remember that the earlier you start saving, the more cash you’ll have at hand when it’s time to buy your car (significant down payment).

A large or significant down payment usually translates into lower monthly payments and interest rates when it’s time to purchase your car.

2. Improve your credit score

As a college student, a good credit score means you can easily get car financing at better interest rates which translates to lower monthly payments. In other words, good credit makes the car cheaper to buy.

Most college students usually start with a low credit rating, and since they have no experience with building credit, they do not know how to improve their credit scores.

Here are a few ways you can improve your credit score:

  • Make sure all your bills are paid on time
  • Limit how often you apply for any type of loans
  • Get a credit card. Since most college students don’t have a credit card, they can ask to be authorized users on someone else’s credit card.
  • Avoid subprime loans. These loans are usually targeted at people with bad credit ratings, but these loans come with unfavorable terms and conditions.

3. Get a job for a steady income

Consider getting a job to support your funding—it could even be a side gig for more money. This is because a job usually translates into a steady income which is invaluable to you as a broke college student looking to buy a car.

In addition to this, a steady income and a good credit score are high on the list of factors lenders usually consider when it comes to approving your car loan application.

Here are some jobs broke college students can get on campus:

  • Resident assistant
  • Teaching assistant
  • Campus bus driver
  • Campus dining
  • Library assistant
  • Paid internships and more

4. Determine your payment option

a. Cash

Making an outright payment for a vehicle in cash is usually cheaper than buying it in installments due to a lack of interest over time. It also gives you more options on the kind of vehicle you can pick, such as a brand-new or used vehicle.

However, paying in cash means you have to pay the full purchase price upfront as opposed to financing the car. This is because the average college student does not have the income or credit score required to finance a vehicle.

So, if you can afford it, paying in cash means you do not have to worry about any monthly payments or loan defaults. This is of immense benefit to broke college students who usually have to stick to a very tight monthly budget.

b. Car loan

As a broke college student, taking out a car loan from a local financial institution can be a viable option especially when you do not have the cash to pay for the car outrightly.

An upside to taking a car loan is that the vehicle becomes yours after paying off the loan completely, but you must understand that paying off loans can take quite a bit of time.

So as a broke student running on a strict budget, taking a car loan is not advisable due to the inconveniences attached to making a monthly payment.

c. Lease

Leasing a car simply means you pay a monthly fee to use the car (for a limited number of miles), but you do not own the car entirely. When the lease term is up, you can choose to return the car or purchase it (with cash or financing).

Some upsides to leasing are that it is relatively cheaper than monthly auto loan payments, and you also get to drive a vehicle for a while without any requirements to purchase the vehicle.

Although you will avoid paying any loan interest on a lease, you are required to pay some fees associated with leasing a vehicle. So you need to consider your budget before taking a lease as these fees can add up very quickly.

d. Bring a cosigner

As a broke college student, having a cosigner with a high credit score, verifiable proof of income, and proof of residence can help you get your car loan approved.

This is because a cosigner essentially agrees to make the payment for you in case you default on your payments. However, you need to make sure you stay on top of things because defaulting on your repayments can damage your relationship with your cosigner since they are essentially responsible for any faults you make.

Also remember that if you default, it won’t just affect your credit; your cosigner’s credit rating will also be negatively affected.

5. Look for a cheap car

a. Dealerships

Although car dealerships sell new and used vehicles at retail and market prices, used cars are the best bet for college students.

This is because used cars are usually cheaper; depending on mileage, year, and model. Add this to the option of financing or outright payments provided by dealerships, then you start to see why dealerships are a great way to buy a car as a broke college student.

b. Online marketplace

Marketplaces like Craigslist or Facebook Marketplace are a great way for car buyers to find individual sellers looking to sell their vehicles at great prices without the usual middle-man or dealership markups.

The only caveat with this method is that you need to have someone on hand to inspect the vehicle for you as there are usually no warranties associated with this form of vehicle purchase.

c. Car buying websites

You have the internet at your fingertips, use it. You would want to be extremely careful not to buy a stolen car that has been legalized

Buying a car in person can be a hassle in terms of inspections, negotiation, as well as the requirements needed to complete the transaction.

However, buying a car online allows you to check out a wider range of vehicles, check vehicles outside your location, compare, contrast, and look at the average prices a particular vehicle is sold for. You also have the option of taking advantage of promos, discounts, instant communication with the seller, and others conveniently from wherever you are simply by using the internet.

The only downside to using the internet when car shopping is that you can’t see the car physically to discover any hidden flaws and problems not present in the “listing” pictures.

6. Consider co-ownership

If buying a car as a broke college student is beyond your budget or credit score, consider finding a co-owner, it could be your roommate, partner, or sibling.

Sharing a car with others allows you to split the car’s running costs with them. However, no party has total control over the car which can be a bit unnerving for some students who are not used to sharing.

7. Rentals or car-sharing programs

Car-sharing programs such as Zipcar and Enterprise Rent-A-Car are a great way for broke college students to obtain a vehicle. These programs are basically offering cars for rent on a short-term basis.

Traditional rental programs are also an ideal way to buy a car as a broke college student. However, there are a lot of out-of-pocket costs usually associated with these programs such as depreciation, insurance, maintenance, and repairs.

8. Get it as a gift or loan from family

To buy a car as a broke college student, you can request a car as a gift or get a loan from family members.

Broke college students who can’t get financing can ask a family member to finance the loan in their name, cosign the loan, or just buy it outrightly and make monthly payments to them. Asking for help might just do the trick.

Meanwhile, you could test drive the car without buying it.

What to consider before buying a car in college

Just to aid your decision-making regarding how to buy a car as a broke college student, consider the following while planning to get yourself a car.

  1. Parking space

Parking costs are determined by location. While urban areas with limited space have high parking costs, rural areas with a lot of space have extremely cheap or even free parking, so you don’t have to cheat the parking meter.

So you need to factor in your college location before you simply assume you have access to cheap and easy parking spaces. This is to avoid having to offset unplanned parking bills or fees.

  1. Insurance

The reality is that college students do not get low insurance rates when on their own policies, so most of them opt to stay on their parents policies while in school to keep insurance costs down. Per Allstate, you can stay on your parents’ policy or get your own, so check with your agent.

It’s been noted that many insurance companies offer very good rates on car insurance for college students with clean driving records and safe habits.

So, it’s best to hunt around for favorable insurance rates before choosing a policy so you can keep costs down.

  1. Gas and maintenance costs

Basic non-luxury entry-level vehicles are cheaper to fuel and maintain compared to their luxurious counterparts.

Vehicles from luxury marquees such as BMW, Mercedes, and the like are not recommended for college students. This is because the average out-of-pocket costs for fuelling these vehicles, performing routine maintenance, and replacing parts in the event of any repairs can essentially put a huge hole in the student’s pockets.


Is it smart to buy a car in college?

It is very smart to buy a car in college as long as you can afford to maintain the car. Do not buy a car while in college unless you have a stable source of income and parents willing to handle the bills.

Which car is best for college students?

Basic non-luxury entry-level vehicles are the best type of vehicles for college students because these vehicles don’t usually require much space to park (which is a huge advantage in campuses where parking space is at a premium), have lower insurance rates, and are much easier on the pocket of college students when compared to their luxurious counterparts.

How can college students afford a car?

As a college student, you need a steady job to get money to buy a car. A job usually translates into a steady income which is invaluable to you as a broke college student looking to buy a car. In addition to this, a steady income and a good credit score are high on the list of factors lenders usually consider when reviewing your loan application.

How much should a college student spend on car?

$7,000 is the most you should spend on a car as a college student. You have piles of financial commitments, and you do not want to go bankrupt because of a car. You may settle for a nice used car for an affordable amount.

Read also: how LLC writes off cars



It’s a wrap-up for the topic “how to buy a car as a broke college student”. The good news is that you can afford to buy a car even as a broke college student.

There are several factors you need to put into consideration, such as the mode of payment that works best for you based on your current financial situation, as well as the best place to purchase the vehicle.

Most importantly, you need to choose a car that best suits your needs, is easily affordable, and is cheap to run.

Latest posts by Bernard Juchli (see all)

Bernard Juchli

Bernard Juchli is an experienced racer, mechanic and team owner who trusts Avon Tyres.Bernard is the lead driver and force behind his Big Dog Garage Race Team. He is the General Manager and Chief Mechanic of Jay Leno’s Garage. Bernard and his crew of seven are responsible for all repairs, restoration and fabrication of Jay’s incredible automobile and motorcycle collection.

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