Car loan from Carvana

[Red1Blue]

My scores are mid 500's and with several charge offs and collections. I got car loan approved from Carvana. But interest rate is high. They are quoting 18%. I am actively working on rebuilding the credit. Should I go ahead and get the car loan from Carvana or should I wait 3-6 months before I buy the car ? If my scores improve would it help to lower the rate ? If I buy the car now and add car loan would it help boost the scores in the next 6 months ? Which is advisable move ?

[Anonymous]

Since you are asking if you should wait, then it sounds like you do not need the car?

If you can wait, scores will rise from making on time payments to credit cards and other loans,

and time will help too....3-6 months time? Only time will tell but it is very dependent on your credit reports now

and what other types of credit you have to boost it along.

If you are willing to pay 18% interest now, then that is your choice,

If/when scores do rise, you can possibly refi at a lower rate in the future.

Good luck!

[Red1Blue]

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@Anonymous wrote:

Since you are asking if you should wait, then it sounds like you do not need the car?

If you can wait, scores will rise from making on time payments to credit cards and other loans,

and time will help too....3-6 months time? Only time will tell but it is very dependent on your credit reports now

and what other types of credit you have to boost it along.

If you are willing to pay 18% interest now, then that is your choice,

If/when scores do rise, you can possibly refi at a lower rate in the future.

Good luck!

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I am working on rebuilding the credit. In the next 3 months at least 10 charge offs and 7 collections should be paid. That still leaves about 12 chargeoffs that would take another 6 more months to pay off. I am not sure how quickly my score would go up to qualify for lower interest rates. I am not sure adding the car loan now would help boost scores. As you said I could refinance the car once my credit scores improve. I can live with out another car for now. But I dont mind having a nice car. If it helps boost the scores then I want to consider getting loan right now. I am not sure if I should go for it now or wait 3 months and see where my scores stand and if that would allow me to secure loan at low interest rate. I might talk to local credit union and see what they might want offer. Interest rate on Carvana loan would vary with the amount of the downpayment and vehicle year.

[Anonymous]

It is sounding like a second car or one that is not needed at this time.

If you have all that money each month going towards your collections etc,  (instead of a car payment)

then that means they will be paid off that much quicker.

Think about having those paid off and credit score boost, and hope to get an apr for half of 

what you are staring at now.

Set some goals, and battle until you get there.

Short term and long term goals.

[Red1Blue]

I have to live a life too. I can not keep worried about collections and charge offs every day. CO/CA are being paid off slowly every month. I am sure it will take time for the scores to boost slowly.

[Brian_Earl_Spilner]

What I would do is hold off for at least 6 months. Put aside the money that would have went to the car payment and insurance. If your score isn't where you want it to be, wait another 3-6 months. Rinse and repeat. The point of putting the money aside is to get you in the habit of not having it as well as allowing you to put a larger down payment when you're ready.

Larger down payment > smaller loan > shorter term > lower rate

[Red1Blue]

Let me wait next 30-45 days and see where score stands. 3 Collections should fall off and 4 CO should show $0 balance. There will be still many baddies letft to resolve, but at least let me see what score gains I would see.

[Anonymous]

I would under no circumstances whatsoever sign for an 18% loan.

[recoveringfrombk7]

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@Anonymous wrote:

I would under no circumstances whatsoever sign for an 18% loan.

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+1474755262527 !

[Dj4Money]

 I've seen you post similar things in similar threads.

 If OP was stuck paying 18% for the life of the loan then that would stink and not recommended by the community.

 But we're on a financial literacy forum/message board, things like refinancing are discussed regularly. So with that in-mind, you are not stuck with paying 18% interest on a car loan. You can refi, the approving bank is unlikely to refi their own loans, big deal. There are many lenders out there that will refi a car including major banks.

  Carvana told me 27% and min 3K down which worked out to about $11,000 amount financed. Upon further research Carvana is just CarMax but online and no physical dealerships. No negotiation, fixed pricing claiming to ease the car buying experience. What that means is you are paying $2-3K extra for the same car available on a new car dealers used lot. Not only that with heavy incentives, I was able to find a new car for thousands less than a used car from either of those companies, not a CPO and no factory issued warranty make it a bad deal all around IMHO.

 Both will finance anybody for the most part, but at what cost?

 It sounds like the OP doesn't need a car so in that case, it is worth waiting for your credit to heal more and then purchase a car with a better rate.

 The option of refinancing is always out there.