Can I use student loans to buy a car?
Q: Should I use student loans to buy new car? I found a nice, slightly used Ford for $18,000. With only $2,000 down I can take an auto loan for about $16,000 at 7.9%. I am also a full-time student, and all tuitions are more than covered by student loans and grants. In fact, after everything is paid I still have close to $16,000 in loans which is available to accept so I can buy this car outright. Is that a good idea? I have already some $11,000 in student loans from 3 years ago with 5.0% interest. The new amounts should I accept them, will be $7,000 at 6.25% and $9,000 at 5.75%.
A: Sounds like a plan to me, although you may be going against the rules. I am not sure if the promissory note you signed allows to use student loans to buy a car or pay off another non education related debt. You will probably get away with it, regardless. I knew of a student or two, who put their loans towards several things. One bought Honda Accord Coupe, the other an engagement ring for his future wife. Never had any issues.
You will be saving on the interest. And while student loans can not be included into bankruptcy which I hope you are not planning to file for, they can be deferred on some occasions and should you fall on hard times, you go into forbearance. And if you miss a few payments, no one would repossess your Ford. So if I were you, I would probably go ahead and use student loans to buy the car.
Sat May 22, 2010 01:05PM | Copyright: www.bad-credit-advisor.com | More in Student Loans | Comments (0)
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