Is it possible to use a student loan to purchase a used car?

I want to get a car when I go to college, but I don't have any money to do so. Can I use part of my student loan to buy a car?

Answer
Is it possible to use student loans to buy a car? Sure. Is it a smart move? No.
Once you obtain the money for your student loan, you’re not legally bound to spend it in a particular way. However, using this money to purchase a car isn’t a financially savvy thing to do because:
  • You’re purchasing an instantly depreciating asset
  • Student loans have higher interest rates than normal car loans
  • You’ll be making payments on the car for longer than you’ll want to keep it
Therefore, you should avoid buying a car with a student loan. Instead, look for a good value on a used car and buy it with cash. It’s best to use your student loan money for its intended purpose: furthering your education.
However you obtain your car, remember that it’s illegal to drive without car insurance. Use Jerry to compare dozens of competitive quotes and find the best savings for your desired coverage level.
Eric Schad
Answered on Nov 17, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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