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Your Thoughts: Financing a new car to build credit.

K

KEV1N

Platinum Member
I'm a college graduate and I was fortunate enough to land a job. At any rate, I'd like to note that nothing is wrong with my current car. However I may be in the market to buy a car next fall, depending on job stability. I haven't had a credit report done, and plan on doing that after I pay off all my CCs in the next few months.

I was just wondering if financing a new car through the dealer is a good way of building credit. Is it superior to getting a bank loan? I was looking at cars in the $20k range and that seems manageable given a good (40%?) down payment. However, if it's no better for my credit than a substantial bank loan, then I'd rather loan $20k and buy my mom's IS300 from her and let her buy a new car.
 
Financing through the dealer is ALWAYS a bad choice - it's only there for the lazy and dumb to use.
 
Originally posted by: DougK62
Financing through the dealer is ALWAYS a bad choice - it's only there for the lazy and dumb to use.
Click to expand...

no... 0% financing for 4 years is not a dumb choice
 
I will probably update this thread when I get my credit report. I've always been under the impression that financing through the dealer is somehow "Better" for your credit than getting a bank loan. So I guess this isn't true? Does someone have a quick and dirty "hierarchy" of what's good for your credit?
 
Originally posted by: notfred
If you have no credit you're not going to be able to get a $20k car loan.
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That would depend on his income and down payment. With a 40% down on a reasonable purchase price on a newer car, I'm sure he'd be able to find a loan regardless of credit history (or lack of).
However, he said he was going to pay off all his CC's so it sounds to me like he already has credit.

KEV1N, if you're buying a new car, then the manufacturer's financing at the dealer is the best way to go if you qualify. Otherwise, bank financing is usually best terms-wise. As far as "building credit", it doesn't matter whether you get it at the bank (or credit union or over the internet or wherever you get the best deal) or at the dealer. Dealer financing for used cars should be avoided, as they usually increase the rate to increase their profits (especially if they know that you think that might not qualify) or because you might get "rolled" (a practice where they put a customer in the car they don't qualify for, then force the customer back to the lot a week or so later and, through a clause in the contract, force the customer to pick out a lesser car that they do qualify for, but at a higher profit margin for the dealer).
 
Originally posted by: DougK62
Financing through the dealer is ALWAYS a bad choice - it's only there for the lazy and dumb to use.
Click to expand...
Not when you get 0% for 48 months like I did on my last car -- then it's a better deal than paying cash. But those financing incentives are only available on new cars. For used cars, bank (or other 3rd party -- anyone BUT the dealer) is always best. See my post above.
 
Vic, thank you for the very helpful post. If the 0% financing deals are abound next fall and there's a car that actually turns me on, then I will look into manu. financing. You answered my question about the credit building though. Thank you.
 
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