Sub-prime lenders are targeting students for auto loans in an attempt to wrestle more money out of unsuspecting clients. Students, especially those in college or university, wish to have the means of travel, and convenience that a car can offer. The reality of the situation, however, is the debt that will accrue as a result of these auto loans.
Car loans are tricky, and they can come at the cost of hurting your credit rating score while you are still in school, which will severely impact your purchasing power once you get out of school. A bad credit rating will leave you with no options but to pay exorbitant interest rates, since you will be considered a high risk. This is how the cycle of debt continues.
Many sub-prime lenders target students in order to prey upon their lack of financial responsibility and knowledge. By offering car loans without down payments, and without credit, the student will be duped into a long-term auto loan, which is nothing more than a ticking time bomb, leading to heightened levels of debt and stress. A student will be so excited at the prospect of having a car, that the student loans weighing heavily on their finances will be temporarily forgotten, and they will not be looking to find the best auto loan, as this will seem to be it.
Students with poor credit, or no credit, will have a hard time making the car payments. This is precisely why they are being offered auto loans by sub-prime lenders that are targeting them for that exact reason. If a student misses their payments, and begins to sink into a quagmire of debt, they will be forced to turn to a debt consolidation firm in order to get their finances straightened out. This works nicely for the lenders, who then get their original investment back several years sooner than anticipated, all the while having made quick and easy money on their high interest clients.
It is an unscrupulous tactic to target students for auto loans, but big business rules the world. Students are one of the biggest culprits of poor spending habits, which is why they tend to owe thousands upon thousands of dollars after graduation. Their poor spending habits leads them into credit card debt, which they have a hard time paying off quickly. This revolving door of debt continues for years.
Growing up and taking responsibility comes typically during the college years, when a young person is forced to reach adulthood rather quickly. Learning how to budget their money properly, and how to avoid the pitfalls of debt are part and parcel of the college experience. Students need to make smart and informed choices, especially with their finances. Any decision should be made once all of the necessary research has been done, and the timing is right.