Should I get an auto loan or credit cards first?

[burntwilly]

Hello,

All my scores are in the range of 689-699 (going up every month), and I was wondering what order is best if I plan on getting both an auto loan as well as a couple more credit cards.  I have 3 credit cards right now, 2 of which are older secured cards with low limits and zero balances.  The other card is an unsecured Discover with $6500 limit and 1k balance (PIF tomorrow).  I have a 5 year AAoA and oldest card is over 14 years old in perfect order.  I want to add a couple cashback cards such as AMEX blue cash and Citi Forward, but I also plan on getting a car loan pretty soon (within a couple months hopefully).

Between the 2 cards I want, and the auto loan I want, which should come first?  My scores will all be 720+ before I do anything at all, but as soon as it hits that 720 mark, I want to get going on this.  Why do I have 2 secured credit cards?  Good question.  I got them before I started checking into what my credit report says, and when I did finally check, it ended up being a lot better than I thought it was.  So I guess I'm stuck with them for now.

[Odiseous]

Each credit profile is different. I imagine if you intend to PIF each month for the CCs.; getting the Auto Loan first, may be the best bet. 

If you PIF; the APR on the CCs really doesn't matter.  However; you *will* be paying the APR on the auto loan. 

Can your AAoA, and Inqs take the hit; without greatly impacting the APR on your Auto loan? 

[LTomBerry]

Here's my line of thinking - get the auto loan before the CCs because the inquiries/AAoA might ding your score just a little for a few months. Better to have a higher score to show for the auto loan where you might snag a better interest rate that you'll be paying for a while. If the CCs don't have the best rate, no big deal if you PIF anyway. The auto loan might improve your mix anyway. The only downside maybe is having a high balance/total on the loan but that shouldn't be a big deal.

In other news, who do you have your secured cards with? Anyone that'll let you PC into an unsecured card? If they're that old and in good standing maybe you can upgrade to something with no AF, better terms, higher limit etc.

[Anonymous]

I agree with LTomBerry.  Having a new autoloan likely won't hurt your chances with the CCCs.  Two new inquiries, however, will probably make for a higher interest rate on your auto loan.

[Anonymous]

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@LTomBerry wrote:

Here's my line of thinking - get the auto loan before the CCs because the inquiries/AAoA might ding your score just a little for a few months. Better to have a higher score to show for the auto loan where you might snag a better interest rate that you'll be paying for a while. If the CCs don't have the best rate, no big deal if you PIF anyway. The auto loan might improve your mix anyway. The only downside maybe is having a high balance/total on the loan but that shouldn't be a big deal.

In other news, who do you have your secured cards with? Anyone that'll let you PC into an unsecured card? If they're that old and in good standing maybe you can upgrade to something with no AF, better terms, higher limit etc.

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+1

[Creditaddict]

I'm actually going to go the other way I think... If you only have 1 high limit card and you added 2 more high limit cards I think that would make you look better to an auto loan that you can handle more credit.

BUT, may not really make a difference either way as long as your util is very low and you have the income to support the car and what appears on credit report.

Are you looking at new or used?

What car?

This might help us respond with better answers based on real experience with getting a loan with that company, like Nissan, Infiniti, Toyota tend to be a little more laid back for financing.

[burntwilly]

I'm looking into getting a new (2011) BMW 3 series unless I can find a used 2011 that doesn't look like anyone's ever driven it.  Yes I'm aware new cars depreciate immediately, blah, blah, blah.  That's what is expected when you buy a new car.  It happens.  I'm not investing in a car, I'm paying to be able to drive it how I see fit, and keep it in the end or sell for much lower, etc..

Anyway, when my banks report at the end of this month, my score should be in the low 700's, hopefully in the 720's.  All balances paid on cards except one, with something like a $30 balance.  If my score updates to what I'm expecting/predicting, then I'm moving forward with either a car loan or a couple prime cards.  Or some combination thereof.

[Creditaddict]

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@burntwilly wrote:

I'm looking into getting a new (2011) BMW 3 series unless I can find a used 2011 that doesn't look like anyone's ever driven it.  Yes I'm aware new cars depreciate immediately, blah, blah, blah.  That's what is expected when you buy a new car.  It happens.  I'm not investing in a car, I'm paying to be able to drive it how I see fit, and keep it in the end or sell for much lower, etc..

Anyway, when my banks report at the end of this month, my score should be in the low 700's, hopefully in the 720's.  All balances paid on cards except one, with something like a $30 balance.  If my score updates to what I'm expecting/predicting, then I'm moving forward with either a car loan or a couple prime cards.  Or some combination thereof.

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Well then your just in luck because if you financing/lease through BMW, they will also try to pre-approve you for a BMW credit card.... couple posts a couple years ago talked about going into sign the papers for car and being asked if they would like to accept the pre-approval on the BMW Visa!! try that and if that doesn't happen, when you get home from buying the car apply for a couple Prime Cards

[flyingmd]

One thing not mentioned that you may want to consider in making a decision. Last time i applied for an auto loan with the dealer (MB), i was shocked to. Find 6 Inquiries!! Apparently the dealer thought he was doing me a favor by shopping the best rate. So just be aware that applying for an auto loan with some dealers can result in a huge number of inquiries. Good livk. Let us know what you do and how it turns out.

[LTomBerry]

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@flyingmd wrote:
One thing not mentioned that you may want to consider in making a decision. Last time i applied for an auto loan with the dealer (MB), i was shocked to. Find 6 Inquiries!! Apparently the dealer thought he was doing me a favor by shopping the best rate. So just be aware that applying for an auto loan with some dealers can result in a huge number of inquiries. Good livk. Let us know what you do and how it turns out.

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A few comments here:

1. A bunch of inquiries at once for auto loans count for a single inq on FICO.
2. You are probably better off getting pre-approved for financing through your own bank, and bringing the paperwork with you to the dealer. The Finance&Insurance office of the dealer is their big moneymaker. Dealers get a cut of the interest if they arrange the financing i.e.. their banks approve you for 4.9% but the dealer tacks on 1% and you wind up paying 5.9%. Usually the only time you should use the dealer's financing is if the manufacturer is offering a promotional APR like 0 or 1.9% - check here for BMW deals. But usually they offer the low rate or rebate, in which case you'll have to:
3. Do the math to figure out if it's better to take the low rate or the rebate. Bankrate has a great calculator here.