Loans Answers

Credit Score and Car Loan question..

Question: I do put a lot of miles on a vehicle so that’s why I prefer to purchase >a new vehicle. Is there any advice on my credit rating and whether I >should go ahead with the purchase or wait until my score rises?

Answer: Firstly, top posting is NOT the preferred way to post.

Secondly, I’d only borrow for a (new) car using a home equity load (tax deductible interest). If you don’t have access to a home equity loan, think twice about borrowing beyond the minimum amount need for a used vehicle. Interest will be a killer – it’s NOT wise (Not frugal) paying non deductible interest on an asset that loses money. In that case, it’s best to wait until finances are in better order.

Thirdly, there is much talk that interest rates may decline some over the next year, so there should be no financial hurry to buy now. Furthermore, new vehicles are typically better priced in Jan / Feb .

Finally, the question about buying vs. credit rating makes little sense, unless you have a high likeliness of a significant improvement that might help lower the interest rate slightly. It depends more on whether you really need a car. Holding off 4-6 months will likely provide significant savings and may be enough time to marginally affect your rating.

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Filed under: Home Equity Loan