For many, being a student means being independent. This includes the freedom to choose your means of transportation. However, students interested in buying a car face many challenges: What is the cheapest way to purchase a vehicle? How much will I have to spend on taxes & insurance?
With this article, we want to look at how you can find the perfect car for your life as a student.
Leasing or Purchase?
Many guides on buying a car recommend purchasing a used vehicle. Others advocate for leasing or financing an automobile via a loan. Without a doubt, all these ways of owning a car have their pros and cons.
Leasing means playing the long game. While you may face high monthly costs, the leasing rates might add up to a lower total than outright purchasing the car. When you lease a vehicle, you also face almost no risk of loss of value: Since you don’t own the car at any point, you are not going to be left with an asset that only retains a fraction of its original value.
Financing a car can be pretty challenging as a student. Due to missing creditworthiness, banks and other financers might turn you down. On the other hand, financing a car can be more expensive than leasing since you have to pay the vehicle’s total value. Meanwhile, having your parents help you out with monthly rates might be viable, but it surely does not stand for independence.
Buying a new car is a dream for many students, and in most cases, it remains just that: A dream. The upfront cost for a new vehicle can be tens of thousands of dollars. Even for many people in the middle class, this can be a hefty investment, let alone for students. Besides that, buying a car is always a financial risk: From the moment you leave the dealership, your brand new vehicle loses value. Unfortunately, this is just the very nature of the automotive industry and makes purchasing a car financially unhealthy.
The last option is to buy a used car. But purchasing a pre-owned vehicle might not be the best solution: First off, finding a used car that is safe and in good shape can be challenging. On top of that, depending on the vehicle’s state, repairs and other forms of maintenance can cut into your budget in the long run. If the car is prone to breaking down, the recurring repair costs will slowly outnumber the amount of money you initially saved.
Insurance & Taxes
One of the key factors for new drivers is car insurance. Not only is car insurance mandatory in all states, but it also provides peace of mind for you as a driver. While a minor dent in the front bumper can cost anything from a couple hundred to thousands of dollars, totaling your vehicle without insurance can quickly result in financial doom.
But getting auto insurance is not only about your car; it can also cover damages to other vehicles as well as medical bills as a result of an accident. Therefore, paying a monthly insurance fee is a surefire way to reduce the risk of accidents having a financial impact on your life.
The cost of your insurance depends on several factors. This includes your age, your annual mileage, the state you register your car in, as well as the car model. The make of a vehicle might be more important than it seems at first glance: Certain vehicles are involved in more road accidents than others, so insurance companies use these metrics to set the monthly fees for car insurance.
By comparison, a Honda Civic with an annual mileage of 10000 miles might be cheaper to insure than a Ford F-150 with 5000 miles of annual road usage. Besides the difference in size and cubic capacity, the F-150 is involved in the highest amount of fatal crashes in the U.S.
Taxes, on the other hand, are a monthly fee students should not underestimate. Especially when the budget is tight, vehicle tax can consume a large amount of the funds.
What is the best way to buy a car as a student?
So, getting your first car as a student can be a challenge. When comparing the pros and cons of all different forms of financing a vehicle, buying a used car or leasing seem to be the most viable solutions. Purchasing a new car as a student is almost impossible, financially speaking. Meanwhile, financing a vehicle remains nothing but a dream for most students, too. So, in the end, it becomes a matter of available funds more than anything. But for most students, leasing a car is probably the best solution.