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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?

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Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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.
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