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Regular Contributor
Posts: 210
Registered: ‎10-04-2016
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First Time Car Buyer

I am a college student and have typically secured a great job on campus over the summer. That didn't happen. Instead, I've recieved a job offer that's off campus, but I don't have a car. My parents have a very old Accord 2002 or 2003? with 67k miles that they'd sell me for $3,000 if I wanted it. They even "prequalified" me for 0% financing for a year. Now, I could just pay them the $3,000 outright, but I am wondering if it would be better to get an installment loan reported on my credit profile?


Valued Member
Posts: 52
Registered: ‎04-09-2017

Re: First Time Car Buyer

[ Edited ]

Are you in California? I'll buy that Accord Smiley Very Happy

 

It's always preferred to always have at least 1 installment loan. They don't always have to be cars though. As my father's installment loan is financing of some new appliances.

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Valued Contributor
Posts: 1,616
Registered: ‎12-16-2014

Re: First Time Car Buyer


Schwartzinator wrote:

I am a college student and have typically secured a great job on campus over the summer. That didn't happen. Instead, I've recieved a job offer that's off campus, but I don't have a car. My parents have a very old Accord 2002 or 2003? with 67k miles that they'd sell me for $3,000 if I wanted it. They even "prequalified" me for 0% financing for a year. Now, I could just pay them the $3,000 outright, but I am wondering if it would be better to get an installment loan reported on my credit profile?


I doubt that you can acutually get a 0% loan on a 15 year old car but if you can then sure its a good thing to have.  Having an installment loan history is a good thing for credit, personally I would pay cash for the car and join Alliant and do a secured savings loan ($500), pay it down 95% and build your installment history that way.  The advantage is also no interest because of the way you would pay it down and then you would have a multi year installment loan without having to have a lien on the car and the insurance requirements that come with liens etc.

Gardening till 2018, Goal of 700's by the end of 2017
MyFico Scores Aug 2017: EQ 675 TU 695 EXP 698
Valued Contributor
Posts: 2,072
Registered: ‎03-03-2015

Re: First Time Car Buyer

[ Edited ]

Schwartzinator wrote:

I am a college student and have typically secured a great job on campus over the summer. That didn't happen. Instead, I've recieved a job offer that's off campus, but I don't have a car. My parents have a very old Accord 2002 or 2003? with 67k miles that they'd sell me for $3,000 if I wanted it. They even "prequalified" me for 0% financing for a year. Now, I could just pay them the $3,000 outright, but I am wondering if it would be better to get an installment loan reported on my credit profile?


Sorry, but no one reputable is going to finance a 15 year old Accord. Great cars though. My mom held on to her (new at the time) 1987 Accord until 2007. 

 

I would stick with the Bank of Mom and Pop for this one. If you jwant to have an installment loan reporting on your credit, I suggest you search the forums for "Shared Secured Loan" and see how to get one reporting for several years, at the cost of only a few dollars. 



Starting scores: 552 EQ, 570 TU, 558 EX Current scores (9/29/17): 746 EQ 721 TU 719 EX
Regular Contributor
Posts: 211
Registered: ‎05-16-2015

Re: First Time Car Buyer

I believe his 0% financing was a tongue in cheek thing. His parents are offering him the 0% financing not a bank Smiley Happy

Contributor
Posts: 155
Registered: ‎06-02-2016
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Re: First Time Car Buyer

That isn't necessarily true, many reputable lender's will still offer great financing on older models. My credit union has no vehicle age limit and offer's 3.09% financing for up to 63 month's on older vehicles. I financed my 2005 model vehicle through them at 3.05% for 63 month's a few year's ago (rates have changed a tad since then).

AMEX BCE ($34,500) CITI AAdvantage ($17,000) Region's Platinum Card ($12,000) Discover IT ($13,000) Macy's ($7,400) Chase FU ($10,000) TU:768 EX: 767
Valued Contributor
Posts: 2,072
Registered: ‎03-03-2015
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Re: First Time Car Buyer

[ Edited ]

SEMO wrote:

That isn't necessarily true, many reputable lender's will still offer great financing on older models. My credit union has no vehicle age limit and offer's 3.09% financing for up to 63 month's on older vehicles. I financed my 2005 model vehicle through them at 3.05% for 63 month's a few year's ago (rates have changed a tad since then).


You financed a 9 year old car. Depending on the vehicle, that isn't unreasonable. Many luxury vehicles still command a decent resale value. We have a 2003 Porsche 911 Carrera 4 that still Kelly Blue Books for 24K. 

 

OP is was asking about financing a 15 year old Accord, which could have very different lending standards than the 9 year old car you financed 3 years ago. Plus there are better options for installement loan reporting. 



Starting scores: 552 EQ, 570 TU, 558 EX Current scores (9/29/17): 746 EQ 721 TU 719 EX
Contributor
Posts: 155
Registered: ‎06-02-2016
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Re: First Time Car Buyer

Dee,

 

As I mentioned in my comment my credit union has no vehicle age restriction's. So I was simply stating that there are credit union's on there that will finance a vehicle no matter the age as long as credit isn't an issue, DTI is inline, and LTV ratio's are fine. Credit union's will most definately finance vehicle's of that age. I was using my situation as an example, and I fully understand the vehicle in question is older than what mine was, I was simply giving an option.

 

Another option (depending on your savings) would be to take out a secured loan from your personal bank and use your saving's as collatoral. This will result in a VERY low rate, and an installment loan reporting on your bureau's which will help with scoring if that is what you are wanting.

 

AMEX BCE ($34,500) CITI AAdvantage ($17,000) Region's Platinum Card ($12,000) Discover IT ($13,000) Macy's ($7,400) Chase FU ($10,000) TU:768 EX: 767
Frequent Contributor
Posts: 445
Registered: ‎12-10-2012
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Re: First Time Car Buyer

Buy the Accord from Mom and Dad. Great credit scores can be achieved without installment loans.
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Moderator
Posts: 17,534
Registered: ‎12-30-2011
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Re: First Time Car Buyer

Just sort the installment part of the scorecard with a share secured loan.  Cheaper that way and every bit as effective if not more score wise.

 

I have a different opinion than some as I've been in the dirty scorecards for years, but when I can move even my dirty file by 22 points on FICO 8, worth doing.

 

Method:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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