After more than ten years of training, it has finally arrived: your college graduation. A day that many students dream of, that marks the end of homework, exams, and morning classes. Now is the time to enter the so-called real world and start working.
In 2021 it may sound easier to say than do. After a global pandemic has shut the world down for more than a year, a new college graduate may not be hopeful about the job market, but things are going well. According to the New York Times, average monthly job growth in March-May 2021 was around 540,000 positions, and economists predict hiring will increase further in the fall.
When this happens, you need to be ready as a recent college graduate. A job means you have to commute, especially with more companies returning to the office this year. In many cities, you can’t go to work without a car, but because you’re a recent graduate, you may not have a big budget. Worse still, this year is a unique year for the auto market.
According to Edmunds, there are fewer new vehicles available in 2021. Nationwide dealer inventory fell 48% at the end of April 2021 compared to April 2020 due to a shortage of car chips caused by the pandemic. While this may affect the discounts dealers offer, recent graduates can still find a deal on a brand new or used car.
Many car companies offer discounts to new graduates, so you can score your dream car for a fraction of what you would normally pay. To take advantage of these discounts, buyers usually need to have proof that they are in fact a recent college graduate.
What do you need to use a new graduate discount?
A hard copy of your diploma or transcript
Documentation showing that it is working
A valid auto insurance policy
Credit history, if any
Eligibility requirements will differ from one dealership to another, so it’s important to contact multiple dealers when purchasing a car to make sure you get the best possible deal. For example, you may be able to apply for the incentive if you graduated a few months from now or within the last two years, depending on the dealership or automaker. Other franchises are more stringent, limiting eligibility requirements for those graduating in the previous six months.
Ways to save for recent college graduates
1. Postpone payments
When you buy a car, you will most likely need to make regularly scheduled payments each month. For recent graduates still looking for a job or waiting for a start date, making these payments right away can be financially challenging. Today, many auto companies allow recent graduates to delay their payments for several months. For example, GM allows qualified buyers to defer payments for 90 days when purchasing an eligible GM vehicle and financing it through GM Financial.
2. Use a discount
Some dealers offer new graduates discounts, sometimes up to $1,000, when they buy a new car. How much the discount will be depends on whether you buy or rent the car and the model you choose. Currently, Ford is offering current college students, trade school students, or graduates up to $1,000 bonus cash on a car purchase or $750 bonus cash on an eligible new car rental within two years of graduation. Spending a little extra cash in the form of a discount can go a long way for a new college grad who needs to buy groceries, furnish an apartment or buy new office supplies!
3. Research suitable loan rates
When financing a car, you usually pay an interest rate on top of the base price. However, if you have a good credit history, you may be able to apply for a special and lower-than-normal annual percentage rate for senior degrees. If you get a lower rate, you’ll shorten your loan term and hopefully pay off the car faster. We’ve seen Toyota dealerships in some regions offer eligible new graduates 2.9% APR and $1,000 off for 60 months. Two deals in one!
4. Use a more streamlined loan approval process
You may not have a built-in credit history, especially if you don’t have any credit cards or regularly scheduled payments like rent. This is not an issue with the graduate incentive program. The loan approval process with these programs does not require you to have an extensive background. Audi claims that college programs offer recent graduates one of these streamlined processes. Car buyers or renters don’t need a deposit and credit history for a new lease (but if they have existing loans, they should be in good standing). Audi also offers competitive rates for drivers who do not have credit and do not require a co-signer.
5. Buy a used car
Some companies offer discounted used cars for college students. For example, car rental company Enterprise offers students graduating in the next six months or three years or