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Can You Finance a Car if You Have Student Loans?

Yes, under most circumstances you can finance a car if you have student loans. There are a few things that you can do to make sure that you get the best possible terms on your car loan, though.

First Things First

Two or three months before applying for a new car loan, you will want to obtain your credit report. You want to do this so that you can identify any mistakes or forgotten accounts that may keep you from getting the lowest interest rates and best loan terms. You can get one free copy of your report each year from each of the major credit reporting agencies at We recommend that you get a copy from a different agency every four months so that you have an updated report throughout the year.

Address the Loan Factors

There are several loan factors that all lenders consider. The two most important for you to consider with student loans are payment history and your debt-to-income ratio (DTI). The importance of your payment history is obvious, so we will skip right to DTI. Large lenders want to see that you have less than 36 percent of your monthly gross income committed to recurring payments. Those payments include housing, utilities, cable, credit cards, and the payments on the loan you are applying for. Local and specialty lenders may consider a DTI as high as 45 percent, but you will be required to pay a higher interest rate for the privilege of having a higher DTI. If you exceed the DTI requirements listed, you will want to pay down some of your recurring debt if possible.

While it usually possible to finance a car when you have student loans, there is one major reason that your loan application will be denied for a student loan: you are in default and have a wage garnishment order. The denial will not be so much because of the garnishment as for the high DTI it will cause.

Even if you are denied by large lenders or your local bank, you may still find the car financing that you need. There are many specialty lenders who are willing to consider a high DTI and wage garnishments for student loans. Your best bet is to look online for a lender that meets your personal circumstances. We can help. Go here to submit your application.