Your Money or Your Car: What’s More Important on Campus?

Two items every college student needs are a car and money. You need transportation, especially if you attend a community college, and money pays the bills and provides spending cash. So which one is more important? What if you have to choose? Let’s look at the options.

Fixed Expenses

An automobile represents a fixed expense. That means you pay for it whether you use it or not. The main fixed expense associate with a car, is insurance. If you decide you do not need your car for the next two weeks, you cannot cancel the insurance. You pay for insurance whether or not you drive your car.

You also have money in your car’s value. With two exceptions we will discuss later, essentially you have money you could spend locked into your automobile. It is like having a savings account, but you can’t withdraw the funds. You also have to consider registration fees, any local taxes, gas and routine maintenance expenses like oil changes. It all adds up. Additionally, if you leased or financed your car, you are making monthly payments. If you do own your car outright, you have options.

Car Title Loan

One way to get money out of your car to pay expenses is with a title loan. You go to a lending company, offer your car’s title as collateral, and in return, they give you money to spend as you see fit. The amount of money you receive is based on a percentage of your car’s actual value. If you attend happen to attend college in Austin, this is a legal way to obtain a loan; a Texas auto title loan for example, is a great way for students get some extra cash.

The lending team at TitleMasters says that in Texas, you could receive up to $7,500 in cash borrowed against your car in less than one hour. You can use this extra money for all kinds of school expenses, including tuition, books and living costs. Because you will be making scheduled loan payments, you still get to drive your car with this arrangement, and that offers you the opportunity to have the best of both worlds – cash for expenses, and a vehicle for transportation to your classes.

Before you consider Texas auto title loans as a way to maximize funds, consider all the possibilities. Does the payment fit into your budget? Can you make your loan payments on time? Do you own your car outright? Can you find the title so you can provide the necessary documentation to the lender? If you meet the requirements, it might be a good choice.

Sell Your Car

If you are short on cash like most college students, consider life without a car. That means selling your car and getting rid of all the fixed expenses that go with it. You will be free of insurance premiums, gas and routine maintenance. In addition to saving money, selling your car warrants a considerable sum of money in your pocket that you can use for books, tuition and even something fun. If you can take the bus or walk to classes, you may find that trading your car for cash is the way to go.

When you are forced to make a decision between your car or your cash, in many cases the better financial choice for college students is to use their money for college costs, and not for a car. The problem, of course, is transportation. You have to get to classes and back home again, and there are other places you probably go on a regular basis. If you can figure out a way to do that without an automobile, you will be far ahead of your fellow students in the money game.  

Photo credit: http://www.flickr.com/photos/alexnormand/2687834922/

About The Author

Karla M. Somers is a graduate of community college and a private university. She is a contributing writer for the loan professionals of TitleMasters, a company that helps college students and families use their vehicles to increase their cash flow in Texas and Georgia.