Advice for best strategy to buy a car

[Anonymous]

Hello:

I live in the middle of nowhere and must buy a car in the next few weeks.  My credit at the moment is terrible.  I am however about to get a chunk of cash, and if there is another stimulus check my parents said they'd donate theirs to the cause, so I could have potentially up to say $6-7k cash in hand.  Trying to decide what is best to do, note that I use Navy Federal Credit Union so I'd like to use them for financing as needed.  At present Credit Karma has me at around 550 both EQ and TU, just to give an idea.  One of my cards did say recently my TU was at 575.  Wanting to get a used Subaru in the $9-$11k range.  

Which would be the better strategy?

1) use the cash to pay for delete on collections, then finance with a small down payment?  It won't be enough to clear all of the baddies but it would clear several of them.  Probably have 6 or 7 collections, ranging from $500 to $2000 or so.  Thinking this would provide a good boost to my score pre-applyung for financing.  This would also provide a more permanent boost to my credit overall since those buddies would be gone for good, but a bigger monthly payment. 

2) pay off my credit cards, wait for statements to cut showing zero balance, then apply for financing.  Also see this as a score boost, plus I could still use the money  I used to pay down cards to pay a massive down-payment for the car. I have two Capital One QS cards, one for 3k and one for 1.5k, both maxed out ATM, a Discover It card 1750 limit, also maxed, and a Navy Federal secured card 500 limit (had it since Feb 2020) that I pay off then use every month.  This way though would be a temporary boost but would not have the bigger payment. 

3) Just apply at NFCU for a car loan with the full amount of cash in hand as a down payment and hope they say OK since I'd have more than 50% down.

I was forced onto disability hence the low scores and the maxed cards, but I want to get back to work.  But I must have a vehicle to do so, a reliable one, as I would be facing an hour commute each direction every day minimum to reach any possible job I would find.  As soon as I do start working I will be working hard to rebuild/pay down/pay off.  But I also just quit smoking to be able to afford the payment ($270/mo savings) and a couple other very recent changes mean I have a couple hundred more a month now, so I know I can afford a small payment plus insurance plus costs.  I just am not sure which route to take for best overall strategy to get my financial house back in order.

Thanks! 

[Whitneyy]

Hi, so which companies have your collections? I would look for the ones that I know for a fact has a deletion policy and pay those first. You will get SOME points but not a lot until your last collection comes off.

You will get the most points for bringing down your credit card usage. When do they report?

You want a better rate, so after all these things are executed that is when I would apply for Navy financing. 

[Whitneyy]

Oh and to note, your monthly payment also depends on how much you finance. 

[Anonymous]

I'd say you have good approval odds based on your past amounts. Would be nice to know which financial institution provides 110k for autos. 

[Anonymous]

Thank you for your reply! 

Luckily all cards report around the same time, due dates start with Capital One on the 8th and go up to statement close date of the 15th with my NFCU secured card.  I will go that route and pay off cards if you think that is best.  Perhaps afterwards I will use the freed up credit then to pay off a couple of the collections, that way I have a way to get some removals and essentially come out that I have rolled some of the collection accounts into my car note more or less.  That way I will feel a little progress on that front too.   Those are two with LVNV, and one then each Portfolio Recovery, Ad Astra, and Midland.  

[Anonymous]

@Anonymous I recommend paying off the collections and bringing down the balance of those CCs before making a purchase. I had 5 collections and settled all of them and paid my CC balance to %5 from 85%. I went from 509 ish to 630 by doing what I just mentioned. 

You will get a better rate clearing those collections. If not, they will **bleep** you with the APR. 

Try calling the collection agencies and say you don't have a lot of money and working part time due to covid but you will like to make a lum sump paying to settle the debt. I did this and it worked for me. 

[Anonymous]

And they still agreed to delete even if they settled for a lower amount?  That's great to know!  Thank you. 

[OmarGB9]

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@Anonymous wrote:

Thank you for your reply! 

Luckily all cards report around the same time, due dates start with Capital One on the 8th and go up to statement close date of the 15th with my NFCU secured card.  I will go that route and pay off cards if you think that is best.  Perhaps afterwards I will use the freed up credit then to pay off a couple of the collections, that way I have a way to get some removals and essentially come out that I have rolled some of the collection accounts into my car note more or less.  That way I will feel a little progress on that front too.   Those are two with LVNV, and one then each Portfolio Recovery, Ad Astra, and Midland.  

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All of those do PFD, so I would pay all of those off!