Higher down payment or improve credit score

Anonymous · ‎01-06-2015

I was wanting to wait until much later in the year to buy a new used car but the fact that me heater just kicked out on me makes me think I need to look into getting a new car before the current one craters. I just opened a new card in November which cratered my decent score. I'm now sitting at a 665. Would it be better to take my tax refund and use to pay down card balances (currently at 20% util) so that I can obtain a better rate or add it to the down payment of a new car. I'm looking at spending around 10000 for a new car and the estimated trade in value for my current one is 1000. Estimated tax refund is also 1000. Any advice?

Ragelog · ‎01-06-2015

Do you have a loan on the current one? Or would the $1000 in trade in be part of the down payment?

EQ04 675, EQ08 676, EX08 719, TU08 703 $12704.75/$123050 Revolving Credit (All 0% or 1.99%) - In Garden Since 5/25/2016

Last negative item should fall off in July 2017.

Anonymous · ‎01-06-2015

Own the current one free and clear. I estimate the trade in value of the car to be 1000.

Dj4Money · ‎01-06-2015

@Anonymous wrote:
Own the current one free and clear. I estimate the trade in value of the car to be 1000.

Putting money down has no impact on interest rate. Amount borrowed, FICO score and payment history matter most here.

Captive Lenders will be more lenient, witness the approvals by captive lenders such as Nissan and Subaru recently posted here. My 641 EX score gets me 7-8% from Ford, that's comparable to a CU without the need for pristine credit.

For other reasons I can't complete the transaction right now.

You only want to spend $10,000 OTD? You must be looking at the Nissan Versa, Ford Fiesta sedan, Kia Rio5, Chevy Sonic or Hyundai Accent sedan. Get $1,000 for your trade, a rebate here or there; you'll need to come up with about $2000 cash to get there, maybe more.

sccredit · ‎01-06-2015

@Dj4Money wrote:
@Anonymous wrote:
Own the current one free and clear. I estimate the trade in value of the car to be 1000.
Putting money down has no impact on interest rate. Amount borrowed, FICO score and payment history matter most here.

Captive Lenders will be more lenient, witness the approvals by captive lenders such as Nissan and Subaru recently posted here. My 641 EX score gets me 7-8% from Ford, that's comparable to a CU without the need for pristine credit.

For other reasons I can't complete the transaction right now.

You only want to spend $10,000 OTD? You must be looking at the Nissan Versa, Ford Fiesta sedan, Kia Rio5, Chevy Sonic or Hyundai Accent sedan. Get $1,000 for your trade, a rebate here or there; you'll need to come up with about $2000 cash to get there, maybe more.

I completely disagree. There are plenty of lenders who will take the amount of down payment into account. I know for a fact that Wells Fargo Dealer Services does take it into account on interest rate and that Bank of America takes it into account for an approval all together.

Dj4Money · ‎01-06-2015

@sccredit wrote:
@Dj4Money wrote:
@Anonymous wrote:
Own the current one free and clear. I estimate the trade in value of the car to be 1000.
Putting money down has no impact on interest rate. Amount borrowed, FICO score and payment history matter most here.

Captive Lenders will be more lenient, witness the approvals by captive lenders such as Nissan and Subaru recently posted here. My 641 EX score gets me 7-8% from Ford, that's comparable to a CU without the need for pristine credit.

For other reasons I can't complete the transaction right now.

You only want to spend $10,000 OTD? You must be looking at the Nissan Versa, Ford Fiesta sedan, Kia Rio5, Chevy Sonic or Hyundai Accent sedan. Get $1,000 for your trade, a rebate here or there; you'll need to come up with about $2000 cash to get there, maybe more.

I completely disagree. There are plenty of lenders who will take the amount of down payment into account. I know for a fact that Wells Fargo Dealer Services does take it into account on interest rate and that Bank of America takes it into account for an approval all together.

Oh sure some lenders do, I don't complete disagree either, but you won't get a dramatically different interest rate with zero down compared to say 10%.

Maybe a point or two but nothing out of the ordinary.

You would be better served having a better score, no or very few negatives and put money down only if you want the princple lower. After all if your score is 680 with Ford, you'll get 0% for up to 72 months, not free money but close enough....

Anonymous · ‎01-06-2015

I have no negatives on my account. What's hurting me is average age of credit and new accounts. Nothing can help with that but time. I guess I phrased my question wrong. I was wondering if I'd pay less interest by paying more down and therefore taking a smaller loan and paying less interest or work to build up my credit score and get a better interest rate thereby paying less interest. What's the best use for my 1000? And yeah, I'm finding it difficult to find a good used car in my price range...

Dj4Money · ‎01-06-2015

@Anonymous wrote:
I have no negatives on my account. What's hurting me is average age of credit and new accounts. Nothing can help with that but time. I guess I phrased my question wrong. I was wondering if I'd pay less interest by paying more down and therefore taking a smaller loan and paying less interest or work to build up my credit score and get a better interest rate thereby paying less interest. What's the best use for my 1000? And yeah, I'm finding it difficult to find a good used car in my price range...

I don't know, your not buying a piece of paper so it would help if your were more specific. Like said if you only want to finance $10,000 and you want new, your getting a B segment car, no two ways about it.

Most people have a problem with that and want a larger car. A low interest rate will allow you to get more car, but if your credit is new and if you haven't finaced a car before, you might want to look at first time buyer programs from Ford, GM, Nissan and Toyota.