Advice, Take it or Turn it down?

[StartingOver87]

Ok guys heres my situation.....

credit score 602 (No car credit)

Ive tried every dealer and every bank known to man, even roadloans denied me!

Nissan approved me but heres the details:

2007 Nissan Altima 66,000 Miles with a (dealer warranty)

Sale Price : 14,000

APR: 18%

Payment 405 for 60 months

500.00 down 

The main purpose is to build my credit because in the next 4 years I plan to have a home built.

I guess my question is do you guys think this is a TERRIBLE deal?

[FrugalRican]

It's definitely not the best deal. But it's better than nothing.

Basically,  you have to ask yourself, can you afford to make that payment for at least a year? You can always refinance later down the road.

Are you sure you can't wait a little longer to get your scores up higher and save up a little more for a downpayment? You do say you have 4 years.

[StartingOver87]

I called her and told her that I was going to pass on it, I know it was probably going to be my only approval for a WHILE but I cant see paying that much for a car going on 6 years old.

Thanks for responding,,,

[pizzadude]

A lot of times it is hard to get a great interest rate when you have a thin file with negatives, and no previous auto loans.   But if you can hang in there for 6 or 12 payments you should stand a decent chance of being able to refinance into a better loan.  

[StartingOver87]

I could make the payments easily, I am just worried about getting refinanced in a year due to the fact that its already almost 6 years old. I dont know im on the fence with this one.... On one hand it will help my credit on the other hand I may be stuck with a car and a 18% interest rate...

[StartingOver10]

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@StartingOver87 wrote:

I could make the payments easily, I am just worried about getting refinanced in a year due to the fact that its already almost 6 years old. I don't know im on the fence with this one.... On one hand it will help my credit on the other hand I may be stuck with a car and a 18% interest rate...

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Do you actually need the car?

18% is high.  If you don't need the vehicle don't do it. In fact, even if you do need a vehicle, buy one for cash (beater type) and keep it until you can get your scores up.

If you are looking for an installment loan to help your credit, it is a very small part of the formula (credit mix).

You  could get installment history by borrowing a small amount from a CD placed in a CU and repay that over the course of 6 mths to a year. The payments will be substantially less and it will be coded as an installment loan.

Don't take a bad deal to "fix" your credit.   A bad deal is a bad deal.  IMO, it would be best to turn down this deal.

[StartingOver87]

I'm not going to do it, I am going to wait and save up a large down payment and in a coupe of years buy what I actually WANT and not what they want to put me in.

Thanks for the support!

[FrugalRican]

Good call

[HoldingOntoHope]

It's great that you are looking out to the future with a plan to improve your credit but I think you made the right call on this one. Over a four year period there will be a lot of better opportunities for credit improvement than this loan. I was in your type of situation just a few years ago and with the help of these forums and following advice (even when I didn't ask the questions) I was able to improve enough to become a homeowner just last year.

Good luck on your journey and explore all the forums for advice and answers.

[amkari]

Sometimes there is no rhyme or reason...

My score for EQ was 593... Wells Fargo approved me for $14500 at 14% (25% down) on a 2008 Subaru Impreza

                                              Capital One Blank Check approved me for $18k at 14%

                                              Local CU approved $10k at 7.49% and upped to $22k on reconsideration with $10k down (borrowed from parents) on a 2012 Subaru Outback

Currently I have no car credit either... both previous car loan and mortgage fell off in 2006.

I have 3 CC derogs from 2008, a medical collection which is unpaid, and a couple 30 days from the derog cards.

BUT (and this may be part of the difference) I have a secured $1k USAA AMEX with $0 balance and a $550 Lane Bryant with a $0 balance and Sallie Mae is still reporting a student loan from 1996 as current for some reason.

You don't mention your income but that would have played a role as well.

Had my parents not offered up the $10k I would have taken the 14% Cap One deal primarily because it was STILL cheaper then continuing to repair my existing vehicle.  I'd be leery of 18% though and probably pass, especially on an older vehicle.

Good luck!