Posted: 7/24/2007 11:56:00 AM EDT
| I will get a new car in a few months. I have enough to buy it outright. Is there any advantage to taking out a loan on it anyway to, say, reinforce my credit history in the event of wanting another loan in the future? |
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I would just pay cash. There are a lot of hidden fees that appear once you step into the finance guy's office. If you can get a VERY low interest loan at a credit union or something, I'd say go for it - but by your building credit comment I'm guessing you may not be able to. If you want to build credit, get a credit card, and a personal loan at a bank collateralized by a deposit. |
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I'd have to slightly disagree with some of the above posters. But it really depends on information that the poster did not provide. If you have negative information in your report or if you have little or no credit history, then I'd get the loan, keep it for 6 months, and pay it off. Get a loan for as much of the purchase price as possible so that you have a higher loan figure that you paid off. My wife had crappy credit and we bought a car. I put a decent amount down and we paid it off in a little over 6 months. The loan was in her name. It really boosted her score. If you have good credit anyway, then I'd pay cash. |
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You have to step into the finance guy's office anyway. Hidden fees have nothing to do with paying cash. They have to do with reading your paperwork. Or only doing business with people you trust in the first place. A good credit score is important. Get and pay an auto loan. If you have sufficient funds to make a bid down payment, your payments will be lower. That's great. In fact, I'd recommend it. A credit score is only one part of getting approved for a loan. Your ratio of income to debt is important as well. Bank credit cards and retail credit cards help establish a credit history and "score", but auto credit means more. In other words, when you want to buy (and finance) a $40,000 car in a few years, you'd better have financed a $15,000 car at some point, not just groceries and gas on your Visa. |
Or, even better is to learn to be happy with a $5000.00 car that you drive until the wheels fall off. Even if money was no object, I seriously doubt I would pay 40,000.00 for a depreciating asset. TRG |
actually, in accounting, a vehicle is an asset (equipment) that depreciates now, if speaking kioysaki/non-technical terms, you could view it (the car/house/whatever) as a liability liabilities don't depreciate |