Using student loan for a truck

[racingpit]

there is nothing illegal or unethical about it, if you wanna do it, do it... just pay off the student loan ASAFP once you start having to make the payments...

Yes there is. They make you agree that you won't use that money for anything but expenses for college.

 

[JHG]

student loan for a truck................dumbest thing I ever head of.

Really?

I'm not advocating using a student loan for a truck, T.V., Sled, Booze, Hookers or anything else that's fun.....but, if dude can get a subsidized Stafford loan while in school for less than 6%, and have the government pay the interest while he is in school, keeping in mind he can make payments on the loan just as if it were a conventional car loan while he is in school, it may not be a bad deal. If he's going to school for three more years and has the loan paid off while he's in school, he has essentially borrowed money at no cost to him. Even if he does not get the full balance paid before he graduates, he still hasn't paid any interest on the portion that he paid off while in school. Chances are he could find an interest rate right now on a car loan for less than 6%(local bank running 4.7%) but he would still be paying interest that he would not be paying at 6% school loan, providing that he paid the loan off or at least made a sizable dent in it while in school. It would take the discipline to make the payment(that you don't have to make) while in school, but still could be the smarter economic decision.

Once again, I'm not telling you I support doing it. Its not ethical and its abuse of the subsidized loan system....but, it's not a bad financial decision just looking at it from a dollars and cents prospective if you are going to buy the truck regardless. The safest, smartest, most ethical decision.....drive what you've got till you graduate, but what fun is that???

 

[JHG]

Yes there is. They make you agree that you won't use that money for anything but expenses for college.

Transportation can be a "college expense"

 

[milehighassassin]

I'll say it again....
You can write of interest on a student loan, you can do that with a regular auto loan.


Not saying it is a good idea but also hear what BigHoe said.

 

[SnowAddiction2]

Don't be stupid! This attitude of "I need it now" is what has gotten us into the crap economy we are now experiencing. There will be plenty time for you to become financially irresponsible after you graduate.

 

[Weekday Warrior]

problem is:

once you "justify" the truck, the rest of the stuff is much easier to justify.....

 

[snopropanther]

So you take the student loan and use it for school. then take your own money you have and buy a truck. thats what i was going to do. the money was going to school but my own was going to truck and sled. nothing wrong about that.

 

[Supplicate]

So you take the student loan and use it for school. then take your own money you have and buy a truck. thats what i was going to do. the money was going to school but my own was going to truck and sled. nothing wrong about that.

Why not just take your money and put it towards school?

The main reason I left the University of Wyoming was because a professor asked me: "Why is it you have a job right now?" I said "So I can pay for school." he said "That is what student loans are for."

With people like that in the school system, whats the point? They obviously don't have a f*cking clue about the real world.

 

[phatty]

1- All you people need to understand that student loans can be used for anything to do with getting an education, including getting to and from university, housing, books, clothes, laptops, whatever.

2- If he has to take a loan out to get a vehicle a student loan is a great option. No payments until he is out of school for 6 months (which means plenty of time to work and earn money to pay it off) at a rate of 2%. Try and find a bank that will match that rate on a used vehicle...

3- If i could go back and do it again, i would have used student loans for a down payment on a town house/condo. Yes during the bubble lending was easy and doable. Could have sold it for large profit when i left school. But times have changed now, but i still would think that in 3-4 years you should make more on the house than student loan debt. Whether or not that is true nobody knows.

4- Student loans can sit in a bank and make money for 3-4 years, and be repaid in full the first month with no penalty. You pay no interest and come out debt free AND get to keep all the interest you made during your time at school...

5- Are you getting the point yet that if your going to use student loans for anything other than tuition, that you should be wise and use them as investments into your future and not on a silly truck? You will be farther ahead if you invest, however a nice truck will get you laid... hahahaha

 

[milehighassassin]

3- If i could go back and do it again, i would have used student loans for a down payment on a town house/condo. Yes during the bubble lending was easy and doable. Could have sold it for large profit when i left school. But times have changed now, but i still would think that in 3-4 years you should make more on the house than student loan debt. Whether or not that is true nobody knows.

With that you can actually write off the interest twice...

Once on the student loan, then again on the house.

 

[snengineer]

don't do it, you will regret it latter, especially with whats to come financially for our country.

 

[niner49]

With that you can actually write off the interest twice...

Once on the student loan, then again on the house.

^^^This is what I did! Bought a 2 story 4 bedroom house about a mile off campus! rented the 2 downstairs bedrooms and I kept the 2 rooms upstairs to myself.

Basically never payed rent, deducted the interest on the house and used the property as a rental write off it was going real well until I got married renters had to move out and the wife took over

 

[Wheel House Motorsports]

alright well, after reading through it, some people dont really get my motives, and dont know me, so they are against my technique, this is not a I want it now, but dont have money. My current ride is another truck, but its a toy, i once have maxed it out at 13mpg, and its only a half ton, i cant haul anything, or go anywere for less than $$$

my idea was seeing as i alwasy just pay for things cash i might as well get a loan that aint gonna cost me much interest at all, knowing i will be able to pay it off way before its due. then i can also establish some good credit. which is a huge sorta deal these days for a college age person.

and for those who just dont like the idea of not having the money, i work plenty when i gotta pay for things, i wont drag it out, this last summer before i started college, most kids wanted to party and do whatever, i spent most of my time working 50+ hours a week to pay for my new sled, i work plenty, even during school now. i work on my spare time on campus to make some gas money and whatnot.

also following the ideas bighoe put forth, a truck that i can haul my stuff around in, and get around 10 more mile per gallon is really useful for me being away, normally it wouldnt matter, but beeing 250 miles from home costs me a lot of money to hop back and forth in gas, around $100 each way. all in all after i looked at the truck im not gonna get it, i was just curious what kinda experiances people had with donig things like this.

also on what phatty was talking about in point 5, i already have a truck that gets me laid... i was thinking a vehicle that wasnt a toy would be a dang good investment. so it made sense to do it. oh well, keep up the rants.

 

[phatty]

alright well, after reading through it, some people dont really get my motives, and dont know me, so they are against my technique, this is not a I want it now, but dont have money. My current ride is another truck, but its a toy, i once have maxed it out at 13mpg, and its only a half ton, i cant haul anything, or go anywere for less than $$$

my idea was seeing as i alwasy just pay for things cash i might as well get a loan that aint gonna cost me much interest at all, knowing i will be able to pay it off way before its due. then i can also establish some good credit. which is a huge sorta deal these days for a college age person.

and for those who just dont like the idea of not having the money, i work plenty when i gotta pay for things, i wont drag it out, this last summer before i started college, most kids wanted to party and do whatever, i spent most of my time working 50+ hours a week to pay for my new sled, i work plenty, even during school now. i work on my spare time on campus to make some gas money and whatnot.

also following the ideas bighoe put forth, a truck that i can haul my stuff around in, and get around 10 more mile per gallon is really useful for me being away, normally it wouldnt matter, but beeing 250 miles from home costs me a lot of money to hop back and forth in gas, around $100 each way. all in all after i looked at the truck im not gonna get it, i was just curious what kinda experiances people had with donig things like this.

also on what phatty was talking about in point 5, i already have a truck that gets me laid... i was thinking a vehicle that wasnt a toy would be a dang good investment. so it made sense to do it. oh well, keep up the rants.

dude if you have money, just keep the truck you got, invest some student loans in long term CDs or something and make some money off it. When it comes time to repay the student loans, you pull the money back out and repay, keeping the interest...

but i would buy a town house and rent it out to some college students for more than your mortgage payment. Then your making money hand over fist. hahaha good luck!

 

[snopropanther]

Why not just take your money and put it towards school?

The main reason I left the University of Wyoming was because a professor asked me: "Why is it you have a job right now?" I said "So I can pay for school." he said "That is what student loans are for."

With people like that in the school system, whats the point? They obviously don't have a f*cking clue about the real world.

with what i will be making after im done school i could pay the money back in 4 months. canadian schools are cheaper.

 

[summitchaser]

That is exactly what was drilled into my head by everybody from profs to the finacial aid people. They say it is smart smart it helps you pay for living expenses, transportations food and anything else that is associated with school.

I had brids to shoot, football to play(ball eventually lost out to bird hunting) kegs to buy and girls to chase. Growing up dirt poor I took full advantage of my student loans. I will be paying for college for a while that is for sure.

My only advice is to be careful with it, because once you take the loan it only becomes easier to take more.

 

[Jaynelson]

I tell ya what....I did it the old fashioned way, saved up by working full time, and then worked through college. Came out basically debt free, and it was awesome. I worked hard and partied hard, no regrets. If you can get away with minimal loans, and pay them back ASAP, you will be ahead of 95% of the rest. I aint rich, my family isn't either, and I didn't have a mircle job....

If you are tapped out and using the money because you have 0 other money, then that's a really bad scene. IF you have a clear plan of how to pay the money back (in short order), and still have money leftover for the rest of life, it's not the end of the world.

I'm a bit of a downer on this subject, because working the the auto industry I get to see the debt-pits people dig themselves into for cars/trucks/boats/sleds/whatever and it's pretty scary stuff. Some people would finance a $18 toaster over 5 years if Wal Mart let them....

 

[go high fast]

although there are many, one sign of stupidity is making something simple into something complicated. Another sign is using a student loan for a truck.

Here's something for you. Never borrow money to purchase a depreciating asset.

 

[JHG]

although there are many, one sign of stupidity is making something simple into something complicated. Another sign is using a student loan for a truck.

Here's something for you. Never borrow money to purchase a depreciating asset.

You keep talking about stupidity, there is nothing stupid about figuring out the best deal and leveraging low interest money in order to gain financial ground. There is nothing stupid about using a 2% loan that is interest free for several years rather than using a 6% loan that you start paying interest on immediately. It's only stupid when you make a purchase with out considering all the methods to acquire what you want.

You say never borrow money on a depreciating asset.

The majority of people in America can not afford to walk into a dealership and lay down cash on a $40K truck. Just because they can't do this doesn't mean that they can't afford it or shouldn't buy it. There are plenty of people that make well over 100K a year, that don't have the cash in the bank to drop $40 or $50K. If they are smart investors, they don't have it. Say I have $50K in mutual funds earning 8%. You are telling me that its smarter to pull that money out of the mutual fund and pay cash for a $50K truck? If I do that, in 6 years my $50K just turned in to maybe $15K(through depreciation). If the truck loan is at 5% interest and the mutual fund is at 8%, I would say that it is smarter to "go in debt" for the $50K at 5% due to earning 8% on the mutual fund. In 6 years, going this route, you have over $63(50K + interest earned) in the mutual fund and $59K(50K+interest paid) in the truck that is still worth $15K (there are lots of other economic factors here but this is a simple model assuming that there are no other investments made over the 6 years. So you come out with $78K in assets vs. $15K in assets.
Another example: What if I own a business and its in a large office building with 100 offices. I need furniture, most businesses don't pay cash for it, they finance it and depreciate it over several years in their accounting records. Their loan could be paid off in 2 years and the lifetime of the furniture is 5 years. At the end of five years its not worth what they paid for it, so it was not wise to borrow money for it? Its hard to make money when you and the secretary are sitting on the floor.
Very few things you buy in your lifetime appreciate, if you pay cash for everything that doesn't you will never have much, unless you are in the top 1% or so in the US that make millions of dollars a year and don't invest in anything but a savings account.

Borrowing money isn't a bad thing, irresponsible borrowing is the problem and spending large amounts of money without considering all your options is a sign of stupidity.

 

[Snow Flake]

Selfish to do that

The reason we have so may rules in this country is because people use any idiodic reason they can think of to circumvent the rules we already have.