Borrow money from grandma, or get a loan and build credit?

[OCNewbie]

I'm buying a new car, which will cost just shy of 26k with taxes, tag, etc. I'm probably going to borrow somewhere between 16-20k. I've already been approved for a 16k loan, for 5 1/2 years @ 5.9% from a local credit union based on my own credit. I have a current credit score of 702. I am 28 yrs old, have never owned a home or tried to buy one (no plans in the near future to do so either).

My question is.... With a current credit rating of 702 (which is decent to good as I understand), should I get a 16-20k loan @ approx 5.9% and pay that over 5 1/2 years for the sake of building more credit? Or if my grandma is willing, should I just borrow the money from her, and save the 2-3k (not sure, don't know how to calculate APR's etc.) and not pay any interest, or perhaps offer to pay her 2% or something so it helps her too (interest rates suck these days, if she were to invest that money instead that is).

Thanks for your opinions/input =)

 

[sniperruff]

buy a used car for $8k.

 

[jadinolf]

Originally posted by: sniperruff
buy a used car for $8k.

For sure.

 

[scorpmatt]

borrow money from grandma, get loan, pay off loan with money from grandma

(didn't read OP, going off of title)

 

[darkswordsman17]

Originally posted by: scorpmatt
borrow money from grandma, get loan, pay off loan with money from grandma

(didn't read OP, going off of title)

Thats what I was thinking.

 

[SuperSix]

Originally posted by: jadinolf

Originally posted by: sniperruff
buy a used car for $8k.

For sure.

FTW

 

[MX2]

Leave Grandma alone

 

[JinLien]

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

 

[illusion88]

Originally posted by: JinLien

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

OP is 28 years old, perhaps he is done with college?

 

[Coquito]

I've alway felt that if I can't afford a luxory, I can do without it. I won't borrow & put myself in debt over something I don't need.

 

[JinLien]

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

OP is 28 years old, perhaps he is done with college?

I can understand asking parents for help co-signing for a house because it is too much for most people credit, but grandma for a car at 28 is lame.

 

[Slew Foot]

Depends on the car you want. If you want an American car, buy it used as it loses 50% in two years. Foreign cars dont really lose any appreciable value unless they've been in an accident or have 50,000 miles on them.

 

[illusion88]

Originally posted by: JinLien

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

OP is 28 years old, perhaps he is done with college?

I can understand asking parents for help co-signing for a house because it is too much for most people credit, but grandma for a car at 28 is lame.

If she has the money then what is the difference? Unless she is forsaking some plans to help him pay for a new car, I don't see any problem with this. It will save him approx 3k or whatever the rates will come out to be.

 

[ElFenix]

the interest you don't pay her will be taxed to her as a gift.

 

[MX2]

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

OP is 28 years old, perhaps he is done with college?

I can understand asking parents for help co-signing for a house because it is too much for most people credit, but grandma for a car at 28 is lame.

If she has the money then what is the difference? Unless she is forsaking some plans to help him pay for a new car, I don't see any problem with this. It will save him approx 3k or whatever the rates will come out to be.

Its more about stepping into the world, taking care of things like this yourself, and building a good credit history as I see it. Thats just my opinion.

 

[OCNewbie]

Originally posted by: ElFenix
the interest you don't pay her will be taxed to her as a gift.

Can you explain this further?



Someone's gonna profit off of me not being able to pay cash for this car (an '06 Mini Cooper S, is ranked #1 for resale value for all cars I believe btw). Profit in the form of an interest rate. I figure why pay some credit union I'm not familiar with 5.9% when I can pay my grandma 2% or so, and save myself some money in the process. Isn't there other ways to improve credit (like I said my credit score is 702, which isn't bad is it?), other than paying someone interest for 5 1/2 years?

Also, my grandma has the money, my mom (only living parent) does not.

 

[RaistlinZ]

Originally posted by: MX2times

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: illusion88

Originally posted by: JinLien

Originally posted by: MX2times
Leave Grandma alone

second the motion, and save the money for college.

OP is 28 years old, perhaps he is done with college?

I can understand asking parents for help co-signing for a house because it is too much for most people credit, but grandma for a car at 28 is lame.

If she has the money then what is the difference? Unless she is forsaking some plans to help him pay for a new car, I don't see any problem with this. It will save him approx 3k or whatever the rates will come out to be.

Its more about stepping into the world, taking care of things like this yourself, and building a good credit history as I see it. Thats just my opinion.

Well, wouldn't he be building good credit by borrowing from grandman, getting a loan, then paying off the loan with grandma's money? Build credit and have a 0% interest on the money you borrowed from grandma.

Profit.

 

[Adica]

Leave Grandma outa this. Not that you asked my opinion, but buying a new car (I am assuming new becuase of the 26k) is a bad decision. It will lose value the very minute you drive those precious wheels right off the lot. Of course buying new is exciting, but a poor choice. Buy a newer used car like a 2004 or 2005, save a few thousand dollars that way and get your own loan. Then you won't be so concerned about the couple thousand in interest.

 

[NFS4]

How old is grandma?? Any health problems???

j/k

Just get the loan

 

[BrianH1]

Originally posted by: scorpmatt
borrow money from grandma, get loan, pay off loan with money from grandma

(didn't read OP, going off of title)

 

[FoBoT]

save, save, save your money

 

[everman]

If grandma has that kind of money just lying around, she should be investing it in something very secure, probably fixed income oriented. AAA insured municipal bonds might be a good idea depending on her income. NOT lending it out to someone so they can buy a new car.
And not to knock the op, but in that kind of situation (in general) she's far less likely to ever see that money again.

 

[OCNewbie]

I'll probably end up taking the loan. To be honest, I don't think I could ask her about it, only because I think she might not be totally comfortable with it, and she's the type that doesn't like saying no, and I wouldn't want to put her in that situation. Have already talked to her daughter about it (my mom), and my mom sorta thought the idea of me paying my grandma a little bit of interest, and helping her out, and myself at the same time, was a decent idea, but she's much more keen on me just taking the loan. I guess it's the internal obession of getting the best deal possible that's swaying me to think up such alternate ways of doing this. I've had the same truck now for 10+ years, this will be my first time buying a new car. The truck I got as a senior in high school. So I guess I'm trying to avoid any possible regrets.

 

[Slew Foot]

Originally posted by: Adica
Leave Grandma outa this. Not that you asked my opinion, but buying a new car (I am assuming new becuase of the 26k) is a bad decision. It will lose value the very minute you drive those precious wheels right off the lot. Of course buying new is exciting, but a poor choice. Buy a newer used car like a 2004 or 2005, save a few thousand dollars that way and get your own loan. Then you won't be so concerned about the couple thousand in interest.

The thing with getting a used car from 2004 or 2005 is that unless it's a total POS like a Cavalier or something, its only going to be 2-3K less than a brand new car. At that point your better off getting the new car with the full warranty, who knows what the other guy did to the used car. Especially if it's a fleet car.

 

[WildHorse]