College student - zero credit - question about future car purchase

[Anonymous]

Hello. My daughter is a college student, employed.

She is looking to purchase and finance a car around 11500 dollars. She has 3500 to put down on the car at this moment.

We are anticipating an interest rate offer that is high since she has never had any type of credit. 

Here are the questions?

She wants to purchase now (at will get the high rate) or May/June.

Would it be beneficial for her to wait until May/June and get a credit card to establish some credit in the meantime? Or is that too short of a time period from now and opening a card would just hurt her credit and leave her with a score...but a score that would be low and even worse than "no score"

Any advice appreciated!

[Remedios]

Hi and welcome to the forums 

It would be very beneficial if she opens a credit card, then waits.

May/June timeline will not work because it takes six months to generate a FICO score. 

If she goes ahead and gets a car loan now, she will pay thousands more in interest.  Most people think they can handle it, but that usually turns out to be a huge mistake.

Do you have any credit cards you could add her as AU, in addition to applying for her own? 

It would be for the best if she can hold off for 6 months, but a year would be better. A car loan is not an ideal first entry into the world of credit,  especially a bad one. 

[Anonymous]

I can add her as an authorized user to any of them. Will that help?

[Remedios]

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@Anonymous wrote:

I can add her as an authorized user to any of them. Will that help?

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It should. She will still need a card of her own, but that would help.

It should be a card with $0.00 or low utilization,  older the better. 

[Anonymous]

Is there a Military affiliation? If so joining NFCU can be very helpful by establishing a relationship, then adding a CC. And then possibly a car Loan. I say this because getting a car loan with your local bank is generally better than lettting the auto dealer handle things, and running her credit though 5-15 Lenders. If NFCU isn't an option I'd look at any local CU's she can join, or perhaps her current bank as an option. 

Being pre-approved is always much better than leaving up to the dealer.

I echo the advice by others above, and waiting till she has a score based on her own accounts. 

Also, is the car new or late model? You'll usually get much better deal on late models that haven't sold yet, and won't suffer as big depreciation as new models. Thus the down payment goes further. Best time to buy is the last day of March, June, Sept, and Dec.

With Dec and Jan being the slowest, and more likely to deal.

[staticvoidmain]

I built my credit by getting an automobile loan. I had zero knowledge of credits back then. I do understand why she would choose to go this route. If she does end up in this hole, I would suggest that you look at refinancing as soon as she gets better scores.