Can I Use A Student Loan Or Financial Aid To Buy A Car?
One of the biggest issues that students face when entering college even with financial grants or aid is apart from room and board is transportation. If you have to commute fairly long distances then this problem is even more aggravated. Many students in such situations start to wonder if they can use their student loan funds towards buying a car. Now the short answer to the questions is yes, you can buy a car with your student loan or financial aid but there are a few conditions that you have to first meet.
Remember the main reason the government or a private lender gives you money in the form of a student loan or grant is for your educational needs. The expectation is that you will be using these funds to further your education. Therefore most of your loan money must be used for your tuition and other college related expenses. If you have any left over money from your grant or loan then you have the option to consider how to best use this money.
Again, let me be clear, you cannot use these funds in any other manner but for your education. Now a car can be considered a legitimate expense if it is for the purpose of commuting to your school. Buying a car, buying a laptop and other school related supplies can be valid reasons for your left over funds. The crucial point to note here is “left over funds from your student loan“. The main usage of your student loan must be for your tuition. Infact in most cases your federal loan or grant money is handed over to your college. The college or university once they deduct all your expenses will hand over any left over or remaining funds from your student loan back to you and this again as explained above is expected to be used on expenses that are directly related and for furthering your education.
I hope this answers your question regarding using your student loan money to buy a car. We’ve had many questions around this subject and infact have another article that talks about the same question. As usual I’m listing a few questions we get around this subject.
- “Can I buy a cheap and used car using my student loans“
- “Can I use my pell grant to buy a car”
- “I will be starting college this fall. I really need a car. There are ways for me to get to school other than my own car but they are not practical on an everyday basis. My financial aid is paying for my tuition completely. I was wondering if i could use my student loan to cover the costs of getting a car”
No Related Articles.
Student loans are for paying college costs (tuition and fees). If there is a remaining balance after tuition has been paid, your university will cut you a check for the balance.
This money can be used in whatever manner you would like. However, it is unlikely that as a freshman you will find yourself with an additional 4,000 dollars after tuition is paid.
So, if you are wanting an additional 4,000 dollars you are going to have to try and take out a regular loan. It might be possible for you to get a loan, but you will most likely end up with a very high interest rate.
So, your best bet is to start saving money up now and pay in cash. You aren’t in school right now so there is no reason why you can’t take a couple of extra jobs and save all your earnings.
When schools starts you can probably still manage a part time job.
yes you can that is what financial aid is for
Not ethically you can do it. But the financial aid programs do not check on what you buy they just cut you a check. So, yeah, you purchase a vehicle.
Don’t tell them.. I was attending school 45 minutes from where I lived.. No bus transportation, couldn’t afford taxis, etc. My car played out. The school told me I could use my money to repair my car ($10000 to repair a car worth $500).. WHen they found out I bought a car for $2000, they had a fit and started preaching at me because I should have just got the other fixed (right). As a freshman the most loans you can take out is about $2500 loan..sub and unsub and max $4000 pell.. You will NOT get enough to buy a decent car after your expenses are paid. GL
Good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon.
I am a freshman student, and I received a pell grant for $5600 to be split between the fall and spring semesters, on top of a subsidized loan of $2500. I have a low credit score almost barely but enough to be considered bad I agree that the best way to go is finding a cheap used car which I have and pick up a job. If you do buy a car I wouldn’t flaunt it too bad but then again left over money is supposed to be yours for what you need it for and in all honesty, a vehicle can be considered a school expense you have to have a way back and forth; if you have children like me, to get them to daycare to go to school. Its all in how you word it. Also if you do buy a vehicle you must remember to claim it on your taxes because then it becomes taxable. School expenses are non taxable which remember that you can construe almost anything as a school expense when worded correctly. Just keep up your grades and make sure you do have everything you need for school first.
this is at scrappysmom you are stupid just because your a freshman doesnt mean you cant take maximum amounts on loans or grants. shut up and do research before you post stuff
Student loans are not a finnacial aid grant.
A grant does not have to be paid back while a loan of any type does. The money one recieves from a student loan are usually distrbuted to the school first to cover fees relating to your college education the same goes with federal grants. The diffrence being is that you can use the capital recieved from grants for anything while the loan has conditions of spending applied to it. Violating those conditions will result in termination of contract and could possibly force you to pay back the principle of the loan immediately. The loosely defined terms of most student loans allow for a bit of interpretation from the contractee. So it’s virtually up to you to define how you use the money you recieve from student loans. Although if speculation arises you need to define your usage by the terms of the loan. If you can’t then as a priori you will have violated your contract.
THE MAIN THING IS IF YOUR GOING TO USE YOUR LOAN FOR SOMETHING YOU KNOW IS NOT SCHOOL RELATED
have discretion about it.