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Can you use student loans to buy a car?
I'm in my second year of college. I moved off campus this year and didn't realize just how awful the public transportation would be. The bus isn't reliable—I've already been late for classes and work because of it. I don't have a ton of money, but I do have student loans. Can I use my student loans to buy a car?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear that the bus has been making you late for classes and work. While transportation costs are among the approved items you can spend your student loans on, buying a new car is not.
Student loans, whether federal or private, go directly to your school. Your school will use this money to pay for your tuition and board. Whatever is left over will be sent to you to spend for things like:
- Books
- Other school supplies
- Lab fees/other fees
- Off-campus housing
- Transportation costs
- Meal programs/groceries
While there isn’t someone standing over your shoulder watching how you spend your money, the unspoken agreement is that you’ll use the loan to pay for minimal transportation costs like gas, tolls, parking, and public transportation.
Although that isn’t a hard no on buying a car, if your lender finds out that you’ve misused your student loans they can terminate your agreement. This means, depending on the lender, they can end your current loan, cancel future promised loans, and request you pay them back ASAP.
This doesn’t mean you can’t find another way to get a car. It may not be an easy road, but consider applying for a car loan. If you have trouble qualifying on your own, you could enlist the help of a cosigner.
Once you do get a car, go to
Jerry
to find the insurance coverage you need at a price you can afford. The Jerry app is free to download and will compare competitive car insurance quotes from the top 50-plus insurers like Nationwide, Allstate, Safeco, Progressive, and Travelers. The average Jerry user saves $879 a year on insurance.View full answer
- Gregory R.
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