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New Contributor
Posts: 55
Registered: ‎03-01-2013
0

Bad idea?

So I'm trying to rebuild my credit and have taken care of most of what I have control over on my credit reports.  Unfortunately, I am in need of a new car but don't have the cash saved up for a down payment except maybe a grand.  I also am short on time as well.

 

My thought, which could very well be a bad one, is this.  Take out a personal loan to help cover a down payment.  By doing so, I would be benefiting myself with having another installment loan on my credit to help build it back up, along with an auto loan.  My credit score isn't the greatest right now (592 TU), so the auto loan rates I'm looking at are quite high anyways.  The larger down payment would help increase the odds of a lower rate, and also lower the payments.  This obviously evens out with the monthly payment of the personal loan though, and I am aware of that.

 

Does this sound crazy, or has anyone tried it or know of someone who did?  This was just a thought, and I haven't made any decision one way or another.  I'm just curious for some input.  Smiley Happy

Established Member
Posts: 15
Registered: ‎04-01-2013
0

Re: Bad idea?

I'm definitely no expert, but I think it will depend on the amount of car you're trying to finance...  It will probably be even harder to get an unsecured personal loan than 100% financing with your credit score, and the rate on that will probably be sky high even in comparison to the auto loan.  It might be best to try for an auto loan first, then if you're unable to get anything that way try for the personal loan as a backup plan.  How long will you have before you need to get a car?  $1,000 down may be enough to where you don't need to take out another loan for approval...   Details on the vehicle you're looking at would be helpful to give input.

Regular Contributor
Posts: 154
Registered: ‎09-21-2012
0

Re: Bad idea?


belliott13 wrote:

I'm definitely no expert, but I think it will depend on the amount of car you're trying to finance...  It will probably be even harder to get an unsecured personal loan than 100% financing with your credit score, and the rate on that will probably be sky high even in comparison to the auto loan.  It might be best to try for an auto loan first, then if you're unable to get anything that way try for the personal loan as a backup plan.  How long will you have before you need to get a car?  $1,000 down may be enough to where you don't need to take out another loan for approval...   Details on the vehicle you're looking at would be helpful to give input.


+1

 

Unsecured loans by nature will be vastly more interest heavy than secured loans such as auto-loans. The more risk involved the higher the interest you will have to pay. Honestly you will have an incredibly difficult time finding anyone to approve you for an unsecured loan. An auto loan is more doable, but you will be paying double digit interest rates, and will not get a lot of options. IMO just find a 1000$ bucket to get you from point A to point B and save yourself a lot of time and money wasted. I have been there myself and sometimes you have to hunker down and do what is financially responsible, rather than what is mentally pleasing. Good Luck in whatever you decide! Cat Very Happy

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
New Contributor
Posts: 55
Registered: ‎03-01-2013
0

Re: Bad idea?

That was the one hitch that I wondered about....the ability to get approval from my bank for the personal loan.  I know what the rate would be, at 13.99...which is lower than the auto loans I had recently been approved for.  I do admit this idea isn't necessarily ideal, that's why I was curious what others thought of it.

 

I do have a vehicle currently, that has cost me quite a bit and seems to keep having more and more problems.  I have a 30 mile commute that is split almost evenly with highway and city driving.  

 

I definitely appreciate both of your inputs.  Smiley Happy

Valued Contributor
Posts: 1,435
Registered: ‎09-14-2012
0

Re: Bad idea?

I'm just going to say it, you will not be approved for a 13.99% Personal Loan with your credit scores.  On top of that it would be a very unwise move to start with.  Go into a dealer with your $1k and work a deal, someone will do it.

Never take credit personally

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New Contributor
Posts: 55
Registered: ‎03-01-2013
0

Re: Bad idea?

That has been pretty much my thoughts after sleeping on this idea.  It just didn't seem fathomable honestly.  

 

I appreciate your honesty as well.  I sometimes need to be reminded of where I truly stand, credit-wise......in a bad spot, that is for now at least.  Smiley Happy

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