Home Campus Is a car loan worth it?

Is a car loan worth it?

Car manufactures have bombarded our eyes with advertisements for their new products since the automobile industry was first created; they want us to buy cars.

According to Experian.com, the total American outstanding balance in car loans is approximately $1.37 trillion.

Purchasing a car in cash or with a loan, regardless of if you are in college, is a personal financial choice. It has its benefits and downfalls depending on how you look at it.

2020 Toyota Rav-4 Hybrid
2020 Toyota Rav-4 Hybrid Photo credit: Stephen Bannister

Gavin Rook, an alumnus who graduated in spring 2019, chose to drive an older 2006 Pontiac Grand Prix for his college years.

“I needed something quick and cheap,” Rook said. “I was a poor college student, and I didn’t want a monthly payment for a newer car. I didn’t work in college so a newer car would’ve been like a financial burden.”

Staying financially balanced was important to Rook while he was taking classes. He mentioned that having a financial chain to a car might have allowed him to trust his car more, but it would’ve caused a financial stress he didn’t need with everything else going on during school.

Rook used his unreliable car throughout college because he wasn’t trying to impress anyone.

“It was something that got me from point A to point B,” Rook said. “It wasn’t flashy or reliable, but logically I was doing what was best for my budget.”

After Rook graduated from BYU-Idaho, he was able to get a stable income by focusing on school and earning good grades. Rook graduated with no worries about financial burdens, including a car payment.

After he started working, he purchased a 2016 Subaru Forester, a huge jump from what he was driving before. Rook now drives what he wants, showing that any student can get through college without trying to impress anyone else because of vanity.

2014 Toyota Camry
2014 Toyota Camry Photo credit: Stephen Bannister

“Don’t think emotionally about buying an expensive car,” Rook said. “Cars are marketed in a way that make you feel good when you buy a car. My car was something to get me through college.”

Rook explained that if he were to buy a car based on his emotions, he would’ve spent a lot of unnecessary money on a car he really didn’t need. He said that at the beginning of college he saw a lot of his roommates struggle with car loan debt.

“I would get a car loan if I didn’t have another option to get a car,” said Evan Cramer, a perspective student hoping to attend BYU-I next year. “But I would only use a car loan as a last resort.”

Evan is preparing to go to BYU-I and has always lived with parents. They try to stay away from debt because they believe there are other ways to pay for things that don’t involve owing money to someone.

“Being in debt can raise your credit, which is a good thing, I think, for certain things,” Cramer said. “I would rather get a ride with friends and pay for their gas than get a car loan in college.”

2015 Ford F-150
2015 Ford F-150 Photo credit: Stephen Bannister

According to Credit Karma, it really depends on what you need to do for you and your life. If you need a vehicle but can’t pay for the car yourself because of a lack of funds at the moment, you can get a loan and build credit. But if you don’t want a payment you can pay for the car in full and in cash.

Both sides have their reasons for applying for a car loan or avoiding one. If you have questions about how car loans will affect you and your finances, you can seek a loan officer at your local bank or ask those around you who might have a helpful opinion of their own.

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