Can I take out a student loan to buy a motorcycle?
Tuesday, March 16th, 2010 at
9:39 pm
I have no car to get to school and it’s becoming increasingly difficult to get there. Bikes are cheaper on gas, insurance, price so it’s the best match for me.
Wat.
No. At least not directly.
When a student applies for an educational loan, the lender is required to ask the school for "certification" of your financial aid need.
Your financial aid need is based on the Cost of Attendance at your school – your school’s estimate of what it would cost an average student "like you" to pay your educational expenses at that school.
The expenses that contribute to that Cost of Attendance estimate are tuition, school fees, books, room and board, and miscellaneous education-related costs, which DO include a transportation allowance. However, that transportation allowance is the cost of gas or bus fare, not the cost of an actual vehicle.
If your school bills are paid right now, you don’t have any remaining financial aid "need", and your school won’t be able to certify "need" to a lender.
The only way you could possibly use a school loan to pay for a motorcycle would be if you actually did need to borrow more money to afford expenses that were directly related to the cost of going to school – and you took the money that you really needed for school, and spent it on a motorcycle, instead. Of course, that would lead to the even more complicated question of where you would get the money to pay the school bills, once you used school money for a motorcycle.
None of this discussion gets into the real problem with using a student loan to pay for a motorcycle – and that’s the real "cost" of using student loan money.
By the time you’ve paid back a school loan, over 10 or more years, you will have paid a significant amount of interest. That makes anything you buy with that school loan a lot more expensive. Unless you’re certain that you’ll be riding that same motorcycle in 10 years, you’ll still be making payments on that bike years after it’s either parked in some one else’s driveway, or rusting in a junkyard. Worst case scenario – you’ll be paying off that bike AND another vehicle at the same time.
Educational loans are not intended to be used to purchase any kind of vehicle – there are mechanisms in place to discourage it – and it’s not a good use of money.
I hope that helped. Good luck.
No. That’s called fraud.
Cheers!
Romo.
I have friends that have done this.
I don’t know if it legal. I don’t think it is.
Insurance is very cheap. $20/$30 a month.
Good Luck