After more than ten years of training, it has finally arrived: your college graduation. The day many students dream of, when homework, exams, and morning classes are over. 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 employment 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 you may not have a big budget because you are a recent graduate. 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. This may affect the discounts dealers offer, but recent graduates can still find a deal on a brand new or used car.
Many auto companies offer discounts to recent 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 actually a recent college graduate.
What do you need to use the graduate discount?
A hard copy of your diploma or transcript
Documentation showing that it works
A valid auto insurance policy
Credit history, if any
Eligibility requirements will differ from one dealer to the next, 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 and limit eligibility requirements for those who graduated 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 who are 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 of 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 a cash bonus of up to $1,000 on the purchase of a car within two years of graduation, or up to $750 on a qualifying new car rental. 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 can 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 opportunities 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 have regularly scheduled payments like rent. This is not an issue with the graduate incentive program. The credit approval process with these programs does not require you to have an extensive background. Audi claims that university programs offer recent graduates one of these streamlined processes. Car buyers or renters do not need a deposit and credit history for a new lease (but if they have existing credit, they must be in good standing). Audi also offers competitive rates for drivers who do not have credits 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 or students graduating in the next six months or three years.