Saving For A Car With Student Loan Debt
If you are trying to balance student loan payments with monthly expenses, you may be putting off larger purchases such as a home or vehicle. Fortunately, we've created a workflow that can help you manage your school debt while also saving up for a car. Learn how to prepare for a big ticket purchase and how refinancing your existing private and federal student loans may help you reach your goals.
Tips for saving money for a car while paying down student loans
A tight budget may make it difficult to save for a down payment on a car, and to meet the minimum monthly payment on a vehicle loan. This can be frustrating, especially if you need a car to get to work, take your children to school or simply make errands more convenient. Before you consider purchasing a car, take some steps to make that the added expenses fit into your budget:
- Draw up a realistic monthly budget. This should include your student loan payments, rent, utilities and other costs.
- Estimate realistic costs. Draw up a budget estimate for a monthly car payment, insurance, gas and maintenance costs. This should give you an idea of how much room you'll have in your budget after you buy a car, and may also help you determine what type of car you can realistically afford.
- Determine whether to pay down debt. Lowering your student loan balance will improve your debt-to-income ratio, which could increase the likelihood that you're approved for a car loan. If possible, consider making extra payments on your student loans to bring down the balance more quickly.
- Set aside money until you're ready to buy. Consider opening savings accounts, CDs or other options that will allow your money to grow while you prepare for your purchase. To save more quickly, look for cost-cutting options in your budget, take on a part-time job or freelance work.
- Find ways to lower monthly debts. Lowering your monthly payments is one of the potential benefits of refinancing or consolidating student loans with a private lender. Interest rates are typically based on credit scores, so review your credit reports before applying to know where you stand.
Consider refinancing or consolidating student loans to help you save
Whether you've just graduated or are well into your career, refinancing your student loans may be a smart way to manage your finances. When you refinance your student loans, you may be able to lower your monthly payments, which can make saving and paying for a new car easier. Refinancing can also simplify your repayment schedule by converting multiple loan payments into one. Before applying to refinance, carefully review the interest rates, features, and benefits offered by your current lenders. This is especially important with federal student loans which offer repayment options most private lenders may not.
Check out 'Should I Refinance?' for more information on the factors to consider when refinancing. To learn more about how a Citizens Bank Education Refinance Loan® could help you call 855-247-5557 and speak with a Student Lending Specialist today.