Don’t Attempt To Cover Your Student Car Insurance Fees With Student Loans!
A lot of students attempt to cover their student car insurance fees with student loans, but this is a bad idea for several reasons.
Student Loans Aren’t Meant to Cover Car Insurance
Student loans usually make very detailed specifications for what the loan can be used for. Possible expenses can include tuition, lodging, food, and text books, and very rarely will a student loan make reservations for student car insurance. Because of this, if you use your loan for student car insurance, you can very easily come up short when it comes time to pay off the real expenses. Tuition fees have tripled in the past 20 years, with a basic year of studies at a four year university costing a minimum of $1000, and often as much as $5,600. Using student loans for ulterior expenses like car insurance can dry up your funds more quickly than you might think.
Repayment Will be Harder to Shoulder
As it currently stands, over 238,000 students have defaulted on their student loan repayments. Compared to the number of students who have received loans, roughly 3.4 million, this figure is close to 7 % of the entire group. Tuition fees are getting higher and higher, and student loans are becoming increasingly difficult to repay. Using your student loan for student car insurance results in just one more expense that will take away from the education itself, and that you need to pay back at a later date.
It May be Illegal
Certain loan organizations such as FAFSA clearly state that the money from the loan is only to be used for direct school purposes. They provide a contract for students to sign which goes over all such information, and by signing the student is specifying that he understands all of the parameters of the loan. Breaking this contract is against the law, and can result in fines or revocation of the loan. If you’re using other organizations, you need to call the administration office and find out what the loan can be used for before using it on car insurance for young drivers.
Most Students Don’t Actually Have Access to the Funds
The majority of student loan organizations don’t actually hand over a check to the student. Instead, they send the funds directly to the college or university, and the student simply receives a letter saying that the funds have been received and everything is in order. You should never rely on your student loans to pay for your car insurance because you could get in trouble with both the loan company and the insurance company.
Rather than relying on student loans or some other third party source of funding for your student car insurance, look for free insurance quotes so that you can find the best possible rate and save money that way. If you liked this article be sure to check out our car insurance for college students post.