Auto Loan vs PIF

[Anonymous]

I do plan to purchase a car this year. I do have a cash for it.

Will it make any sense to take an auto loan and pay 90...99% next day?

I think it can potentially reduce the car price (dealers like to make money on loans and can reduce the price slightly) and it can improve my credit scores for auto loan on file.

Am I correct? Are there any underwater stones?

[Anonymous]

If you have no other open installment loans reporting, yes it would improve your scores. Personally, though, I would just pay cash and have no car payment.

[djshifted]

Not having a car payment is very nice, but I agree that if you're looking to improve your report/score, having an installment loan does help.  Maybe you can get a low/no interest loan on it as well.

[Anonymous]

I do have open secured loan for 500$ with a CU.

Thanks for your thoughts 

[Anonymous]

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@Anonymous wrote:

I do have open secured loan for 500$ with a CU.

Thanks for your thoughts 

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That being the case, you would likely derive very little benefit score wise from the auto loan.

[Gmood1]

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@Anonymous wrote:

I do plan to purchase a car this year. I do have a cash for it.

Will it make any sense to take an auto loan and pay 90...99% next day?

I think it can potentially reduce the car price (dealers like to make money on loans and can reduce the price slightly) and it can improve my credit scores for auto loan on file.

Am I correct? Are there any underwater stones?

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I'd stretch it at least 18 months and build some credit history. I made the mistake of paying off one of my cars much too soon. It didn't do much for my scores because of it.

Yes you pay a little more in the end. But it can benefit you in the long run on the next vehicle purchase. I'm now paying on another vehicle. I'll push it to at least 24 months before I pay it off. Even longer if I see it strengthening my credit profile.

[Anonymous]

Sounds like you could have an advantage in terms of buiding a credit history by financing the vehicle.  Paying it off right away won't do you much good.  What I would do is put about 70-75% cost down, then finance the rest.  You will end up with very little interest to pay and a very small car payment (which you can pay with the money you have left over) the credit history you build will help you get better terms on things you need in the future.  We got fedup with credit and went for 5 years paying cash for evertyhing but when it came time to borrow money we needed for a car loan we were stuck with subprime lenders so we ended up paying more in the end than had we simply used credit but do so wisely rather than not at all.  My 2 cents anyway

[Anonymous]

depends on the rate you can get. with all the 0.0% and 0.9% loans out there, you can take that cash and invest it in bonds and come out ahead....

[cartwrna]

Get a loan, pay 95-99% of the loan off the next day and you won't have a car payment forever (not literally forever, but awhile). Basically it pre pays your payments, so no payment until the end of your loan term.

[Noctilum]

I would say get a loan to keep your credit profile diverse.  You never know when you will need an auto loan and having one in your history will help.