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Can I use my student loan to buy a car?
I just got a student loan, but there's a bit of money left over after paying tuition. Can I use this loan to purchase a car or make a down payment?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Can you buy a car with your student loan rather than a
car loan
? Sure. There’s no oversight on your finances after the money from a student loan hits your bank account.Should you do it? It’s probably not a good idea.
Here are some reasons you don’t want to use your student loan to buy a car:
- Higher interest rates than a standard car loan
- Instant and continuous depreciation on your vehicle
- The potential to still be paying on a car for 10 years or more, even if you don’t own it anymore
For these reasons, you should avoid the temptation to use a student loan to buy a car. Instead, you should save up or get a part-time job to buy a decent
used car
. For a few thousand dollars, you can find a ride that will get you around town for work or play.When you do get a car, don’t forget about your car insurance. You’ll need at least
liability coverage
, but you can always shop around to get the best rate.Download the
Jerry
app, and in just minutes, you can compare car insurance rates from dozens of reputable carriers.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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