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2nd vehicle advice

Klhs1114
New Member

2nd vehicle advice

I am trying to improve my credit, which is not good at all  based on terrible financial habits in the past.(Current 592 FICO 8 score). I only have 2 credit cards but an overall credit usage of 47%, which I will have under 29% by the end of March and totally paid off by the end of April. (Total limit of $1800 combined). In December, I purchased/financed a car for my soom the be college bound daughter. A month later, MY vehicle blew a head gasket and is not able to be repaired. I've been sharing my daughter's vehicle but due to her work schedule and picking up a part time job myself, that's no longer an option after the beginning of April. I currently owe $7100 on her vehicle, which can be paid off early with no penalty. Between savings, the stimulus and what's left over after the bills at the end of the month, I'll have between $7000-$8000 to spend on a vehicle. I commute 80 miles round trip daily so I want to get something a bit newer than my old car (2005), if possible.

My question is-Should I pay off my daughter's car, which leaves me with $500-$1000 for a down payment on MY car and finance the rest or do I take all the $8000 and pay cash for my car?  Since I've read paying off a car loan early can actually drop your score, I'm not sure of the best way to proceed. I appreciate any advice you could give me. 

Message 1 of 6
5 REPLIES 5
incognitony
Regular Contributor

Re: 2nd vehicle advice

I'm sure others might have other/better advice. Depending on the interest rate on the other car I vote for not paying off the loan. You could check for something at the 8k or see if you can get something a little better financed with a healthy down payment. Also don't know if you can afford a 2nd payment. You could probably get approved  at Carvana and maybe refinancing if you get a score boost from paying off the credit cards.

 

Message 2 of 6
4sallypat
Frequent Contributor

Re: 2nd vehicle advice

Same here - don't pay off the current loan - it's tempting but your score will drop and your reduced down will be difficult to find financing on your car.

 

I'd take the larger down on your car and use it to "hide" the credit score issue...

 

Try Capital One Auto Navigator SP to see how much you qualify for and at what rate for used cars...

Message 3 of 6
Horseshoez
Established Contributor

Re: 2nd vehicle advice


@Klhs1114 wrote:

I am trying to improve my credit...

 

...MY vehicle blew a head gasket and is not able to be repaired. 


So, just to level set you, there is no such a thing as a car which is "not able to be repaired" when it comes to engine related issues.  Worst case, you can pick up a used motor from a auto-recycler and have it put it for relatively reasonable money.  The question you should ask yourself is, "For the cost of repairing my old car, can I find something as nice for lesser or equal cost?"  If the answer is "no", even if the cost of the repair is in excess of the value of the car, repairing it is still your best option.

I categorically refuse to do AZEO!

Message 4 of 6
mich800
Regular Contributor

Re: 2nd vehicle advice


@Horseshoez wrote:

@Klhs1114 wrote:

I am trying to improve my credit...

 

...MY vehicle blew a head gasket and is not able to be repaired. 


So, just to level set you, there is no such a thing as a car which is "not able to be repaired" when it comes to engine related issues.  Worst case, you can pick up a used motor from a auto-recycler and have it put it for relatively reasonable money.  The question you should ask yourself is, "For the cost of repairing my old car, can I find something as nice for lesser or equal cost?"  If the answer is "no", even if the cost of the repair is in excess of the value of the car, repairing it is still your best option.


That is not necessarily the case unless you can do the work yourself.  A decent salvage yard engine with a warranty and the labor to install can easily total $1,500-5,000.  Anything is repairable, but I wouldn't spend over 50% of the vehicle value for that type of repair.  Often times you can get a decent amount by selling the broke car to a company like Copart.  Without knowing what car and overall condition it is difficult to give a recommendation to fix or sell.

Message 5 of 6
Horseshoez
Established Contributor

Re: 2nd vehicle advice


@mich800 wrote:

@Horseshoez wrote:

@Klhs1114 wrote:

I am trying to improve my credit...

 

...MY vehicle blew a head gasket and is not able to be repaired. 


So, just to level set you, there is no such a thing as a car which is "not able to be repaired" when it comes to engine related issues.  Worst case, you can pick up a used motor from a auto-recycler and have it put it for relatively reasonable money.  The question you should ask yourself is, "For the cost of repairing my old car, can I find something as nice for lesser or equal cost?"  If the answer is "no", even if the cost of the repair is in excess of the value of the car, repairing it is still your best option.


That is not necessarily the case unless you can do the work yourself.  A decent salvage yard engine with a warranty and the labor to install can easily total $1,500-5,000.  Anything is repairable, but I wouldn't spend over 50% of the vehicle value for that type of repair.  Often times you can get a decent amount by selling the broke car to a company like Copart.  Without knowing what car and overall condition it is difficult to give a recommendation to fix or sell.


Sorry, I have to disagree.  My point remains valid, if the cost of the repair, regardless of whether you do the work yourself or pay someone else to do it, is less than or equal to another vehicle equally as nice and reliable, then repair is virtually always more economical than replacement.

I categorically refuse to do AZEO!

Message 6 of 6
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