Question for Sherbros who understand credit

Bird in the hand is worth two in the bush.

A fool and his money are soon parted.

It's a no-brainer. OP can "save" himself a little money by buying the car outright now. Or he can make payments on the car and invest the lump sum which, even through conservative investments, will pay for the interest and then some.
 
Option B. Pay cash for a slightly used car and save thousands on depreciation and use the savings for investments or the future down payment for your home. Financing a car is completely unnecessary.
 
A fool and his money are soon parted.

It's a no-brainer. OP can "save" himself a little money by buying the car outright now. Or he can make payments on the car and invest the lump sum which, even through conservative investments, will pay for the interest and then some.


What's guaranteeing better than a 6% return for the next five years? Investing at 6%, less the 3% interest, nets you 3%. Paying cash and not financing nets 3%. Taking on risk to pocket the same amount of money as with no risk does seem no brainer-ish.
 
What's guaranteeing better than a 6% return for the next five years? Investing at 6%, less the 3% interest, nets you 3%. Paying cash and not financing nets 3%. Taking on risk to pocket the same amount of money as with no risk does seem no brainer-ish.

Right now you aren't going to get a guaranteed 6%. You are likely to get a much better return on investment. There are plenty of index funds that have made massive gains over the last five years. Those are considered low risk investments. Personally I'd rather "risk" 3% interest and have a chance at doubling my money than go the other way. The demographics of Sherdog make it extremely likely that TS is young and can afford to take calculated chances with retirement.
 
Right now you aren't going to get a guaranteed 6%. You are likely to get a much better return on investment. There are plenty of index funds that have made massive gains over the last five years. Those are considered low risk investments. Personally I'd rather "risk" 3% interest and have a chance at doubling my money than go the other way. The demographics of Sherdog make it extremely likely that TS is young and can afford to take calculated chances with retirement.

And that's why everyone has a different strategy. I'd take the guaranteed 3% and you'd roll the dice for X-3%.
 
700 is a good score... i once took a loan out just to keep the money in the bank and pay it off.
 
I don't know, but those credit history goons are bastards. When i applied for my home loan in 2010 they asked me about getting rejected for a mobile phone plan in 99!
 
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Oh Tardzilla... Where have you gone?

Can't remember why he got banned. Funny dude
 
So here's the deal. When I was a young man I got totally annihilated by identity theft. My credit and my history with the IRS were absolutely wrecked. Once I got that mess cleared up, I slowly started rebuilding with a credit card here and there and have managed to grind my score up into the mid 700s.

I'm currently in the market to get my first brand new car from a dealership. Truth is, it's totally within my ability to just buy a new car cash and be done with it then and there. However, I believe it would be in my best interest to finance just so that I can build on my credit history for the eventual date where I might want to someday buy my own home.

So here's my question; if I were to go with the finance option, how long would I have to go with the standard month-to-month payments in order to get some benefit out of it? Can I pay it off in a few months and have my credit history benefit? Should I drag it out for a year?

Like I said, I could pay it all off in a single check if I wanted to. But if I could drag it out for a bit to help my credit history, I would much rather do that.

Any advice and tips would be greatly appreciated.

Thanks,
~just a manchild trying to survive in this adult world

First of all... well done with your current score. Like others have said, you're good to go for buying a home.

But in order to buy a home, you need money for a down payment, which may be a good reason not to shell out cash for a vehicle.

That being said, you don't have to finance all or nothing. My last purchase was a used Jeep for about $20K. I financed $10k (3.5%) and paid cash for the rest.

So in the end, you need to make the decision that makes the most sense for you and your plans moving forward.
 
That is not 100% true. I have a very very good credit rating and I was rejected by some lenders because I had not borrowed a large amount of money prior to the mortgage (got it from paying off my credit cards on time every time etc). I eventually did get it, but some lenders do not just look at your credit score.


This is 100% correct.

It's all a dance and some are gonna wanna slow waltz and others are gonna wanna polka. To be as diversified as possible is the best choice. If you need a car then financing at a low interest rate will do wonders for your credit, not just your score, in the long run. Someone else made a great point, shop around through credit unions. If you get approved you only get one hard pull on your credit and maybe only through one of the 3 bureaus but if you go to a dealership seaking financing I've seen friends get hit with as many as 12 hard pulls. Also most creditors looks at those pulls as if they were only one hard pull but others may not. If you can get in with NavyFed, PenFed those are great institutions that will finance with super low rates and they also have great credit cards with awesome perks and low interest rates as well.

Credit Karma is a useful tool but it's a vantage 3.0 score which is basically garbage. Now the info on your credit report is all there though so that's helpful. If you want to know your true scores, the ones creditors actually use, Fico 8 and sometimes 9, then you can get an account with Creditchecktotal.com. Use their free trial and you'll get true scores for all 3 bureaus for 1 month, after that you can call to cancel and they will offer the $30.00 a month service for only $14.95 and once a month you will get all 3 bureaus scores and reports. They offer Experian reporting all month long though. It's a great tool if you're curious about your real scores.
 
See, what's the part that's confusing to me. My score is in a decent place, but I feel like if I tried to buy a house, they might look at my history and be like "wtf? you haven't even financed a CAR and you wanna get a house?!"
Mid 700 is more than good. Buying a house they don't care much about anything but your score and DTI (debt to income ratio). BUT, if you have 20% down you'll avoid PMI and you'll get something close to the prime rate, so I wouldn't use cash for a car at the expense of a down payment. Better to finance or lease and put that money down on the house.
 
finance it if you can make more money in the stock market with the money at hand...

e.g. if the loan interest rate is 2.5%.. your goal is to make more than that in your investment
 
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