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My FICO score 8 is 730. I'd like to improve it and I saw that what is hurting in my case is no loan activity.
In 6 months, I'll have enough cash to buy a car. I want to buy a 2 year old minivan. I'd like to apply for my first auto loan in order to improve my FICO score but I don't want to pay interest on my used car. Is there a way to do that?
I read that one can easily do that with new cars, but it's not my case.
@villemiami wrote:My FICO score 8 is 730. I'd like to improve it and I saw that what is hurting in my case is no loan activity.
In 6 months, I'll have enough cash to buy a car. I want to buy a 2 year old minivan. I'd like to apply for my first auto loan in order to improve my FICO score but I don't want to pay interest on my used car. Is there a way to do that?
I read that one can easily do that with new cars, but it's not my case.
0% interest used car loan? Not likely. 0% new car financing is typically offered by the car manufacturer through their captive lender to sell cars. I have never seen a 0% financing offer on a used car loan.
OP I agree with others here...getting a 0% loan on a used car just doesn't happen. And I'll also echo that I wouldn't take out an auto loan for the sake of increasing a credit score either. A good credit score will come with age...you certainly don't have to buy it (take out an unncessary loan).
OK, thank you
Techincally speaking, you can get 0% on a used vehicle. Some dealer's will advertise that, and what they do is pre-pay the interest on the loan..but ultimately the cost of the pre-paid interest is passed on to the customer in the form of a higher price for the vehicle.
If I were in your situation I would just pay cash for the vehicle and not spend unncessary money to improve your score.
Thanks. So let say, I find a car loan with 2% interest.
Let say the minivan is $27,000. I would pay $26,000 the fist month. Do I have to tell that to the car dealer? then for how long would I pay the remaining $1000? Is 1 year good enough? I never had a loan in my life. I'm from France and there, studies are almost free (except business schools and private schools).
@villemiami wrote:Thanks. So let say, I find a car loan with 2% interest.
Let say the minivan is $27,000. I would pay $26,000 the fist month. Do I have to tell that to the car dealer? then for how long would I pay the remaining $1000? Is 1 year good enough? I never had a loan in my life. I'm from France and there, studies are almost free (except business schools and private schools).
If you take the loan for $27,000, and pay $26,000 you'll still have to pay the regular monthly payments as if it was a $27,000 loan. So lets say you finance the $27,000 at 2% for 48 months you'll end up with a payment right around $586. In Month 3 ($26k + $586 + balance of loan) you'll have paid off a 4 year car loan. Paying only a small amount of interest. And there's no need to tell the dealer you're doing that.