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steversteves

PSLOC and Financed Car?

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Question that might seem irresponsible;

Has anyone financed a new car while in law school? Does this affect your PSLOC? 

I am on the search for a car, and debating buying new and can afford monthly payments (working a bit during law school) and living expenses without using the PSLOC. 

The situation is this, I have money saved and am able to pay for both living expenses and tuition cash, without using a PSLOC. However, I am taking out a small PSLOC for emergencies.

I can't get a new or used car without incurring some debt. I either used the money I have saved to buy a used car and then pull from credit to pay my tuition, or I pay my tutiion and pull from credit to buy a used car. Both seem not ideal, when I can just finance a new car with 0 down and make monthly payments (over 5 years, none of this 7 or 8 year BS). 

But what I want to know is, does this make sense? And will this affect my PSLOC? Or will my PSLOC affect car financing? 

Has anyone ever financed a new car during law school and can give feedback on this?

Just trying to weigh my options. I like the idea of a new car more for warranty. I don't want any unexpected expenses that would perpetuate more debt during school. 

Thanks in advance!

Edited by steversteves

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Hey Steversteves,

You probably already found your path through this, but thought I'd chime in.

I'm still an applicant, but my wife is a med student and we recently went through a similar scenario. Even though we both had absolute rock star credit scores (880-890 range), we were denied financing by Ford Credit (actually, technically we were told not to even apply, to avoid the inquiry and rejection on our credit files). The reason was simply that we didn't have an income, and the formula they use for determining whether you will be able to make payments is necessarily tied to income. 

In other words, with no income, regardless of your credit history, you are unlikely to be approved for financing - meaning you will likely have to use your LOC (or other resources, of course).

Having said that, other lenders may have less rigid criteria. I'd be happy to hear if others have had different experiences - especially since I may head to law school next year, just as my wife starts making a meager medical resident's salary. ;)

-GM

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I bought a new car the summer after 1L while I was working. You'll need to have income coming in to be approved for financing by my understanding. The only reason it made sense for us to buy was that my wife works during the year and we could afford it without using debt to pay debt. Coming out of law school you're going to have a lot of student debt, I would avoid worsening it by using your line of credit to pay for a car. 

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Have you considered leasing? You have to deal with warranty issues and can save money, seems like the best of both worlds if you need a car in the short-term. Once you graduate and start earning a steady salary you can look into buying new.

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On 11/21/2019 at 1:03 PM, LawSchoolJock said:

Have you considered leasing? You have to deal with warranty issues and can save money, seems like the best of both worlds if you need a car in the short-term. Once you graduate and start earning a steady salary you can look into buying new.

You will typically need to have an income to be approved for a lease, too. At least, on a new car with a higher value. Leasing a used vehicle may be an easier approval, though.

-GM

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I was able to buy a used car though Honda (they applied for financing through my bank). I got a 2013 Jetta and while it was only 14,000, I didn't get a great interest rate due to the lack of income, but, they did take my having a line of credit as sufficient reliability and so I was able to get it. I would say if it is a need, it's worth looking into. I had also JUST switched my line of credit from scotia to CIBC and so I am surprised I got approved with what I did. 

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