Car loans Question!

[bofa]

I hope your tin foil hats double as protective helmets.

While I agree insurance is one of the biggest scams in our country, the litigious nature of our society combined with the astronomical cost for medical treatment, high prices for vehicles (other cars, not your sh!tbox) and outrageous repair expenses, you'd have to be a little nutty to have minimum coverage liability these days.

I will agree that financing older vehicles makes less financial sense, but there are credit unions that will finance them at affordable rates and report to all major credit bureaus.

The crap about financing a $400k house with 50% down is a pipe dream for most. If you have a 500 score that means you are not going through Freddie, Fannie, or FHA so you are going through private funding which will easily tack on a couple of points minimum, not to mention the likelihood that they will still require PMI and your homeowners insurance will still be higher. Talk about pissing away money...

OP, build your credit. These guys won't be around when you need to finance something else and can't because your credit score doesn't exist. If you want some real life-long credit advice, check out CreditBoards.com.

 

[1engineer]

Exactly. "Look how smart I am! I just wasted $10,000 in finance and interest charges buying things I don't need so I can save $50 on car insurance I don't need!"

Sillyness.

[MENTION=67756]Lineman[/MENTION] [MENTION=49649]KidVermicious[/MENTION] you guys are right to an extent. It's also better to have 500 acres in the middle of nowhere and raise your own garden, cows, chickens and pigs and owe no utilities at the end of the month because you are running solar panels or wind mills. Right?

I quit paying with all cash years ago. You can use a credit card and pay in full at the end of the month. You can use a debit card and pull from checking. For big purchases you can finance it at 1 or 2% with good credit now. What would be silly is to use $200K cash for a house to save 3% interest when you can use that same $200K to make 5% on investments.

You guys are good people but we will have to agree to disagree on this one, have a beer and move on to something important, like family, which is most important. We all know that when the time comes to move on we can't take anything with us and the only thing that matters is the family and true friends you have around you. Leaving a pile of cash to my heirs? No way. That is what ruins families after someone passes.

 

[pc1p]

As others have said, there are many subtleties to "credit" and it is certainly much more today than than simply how (or how much) you borrow money...

I'll add my $0.02, which is more than you paid for it...

My last job was with a DoD contractor and they pulled my entire credit history (hard pull) before hiring me. I don't know how or what they all looked through (I have excellent history and a 780 score, so I wasn't worried or bothered to ask), but they certainly made it very aware of the fact that they were going to check it. I also know that many insurance companies (home, auto, personal, umbrella, etc) will check your credit, as will potential landlords, student loan companies, cable and utility providers, cell phone company, and even a credit union (to verify you're a "qualified member").

To the OP, historically there have sometimes been penalties for paying off a loan early. With much of the recent legislation (state and federal), you'll likely not have to worry about any early-payoff penalty though it would be prudent to check your loan paperwork. Since this is your first loan with no C.C.'s, you're on the track to establishing a good history, assuming your financial institution is reporting to the credit agencies (or just one agency). I know some of the buy-here/pay-here places DON'T report, but some do.

You can call your financial institution and ask if they report. Alternatively, you can go to: https://www.annualcreditreport.com/index.action once a year and pull yours for free. Remember that this is a once-per-year only, so give it a few months before pulling to make sure any reportable actions have been reported.

If not, and if you are interested in establishing credit, a small C.C. is helpful. Regardless as to what some other people may think, C.C.'s are actually handy if you're responsible (with no C.C.'s are this point, I'd say you're going to be OK). For example, I buy a lot of stuff with my American Express Gold. If there is ever an issue that the MFG or vendor won't/can't handle, one phone call to them fixes that. Also, I travel a lot (personal and business), so all of my expenses are easy to keep track of. Also, I get a lot of travel "benefits" from using my Amex Gold. For example, a few years ago I hit a very large pothole in the middle of the night with a rental. I returned the car and told them about the damage. I then called Amex and 4 days later I received a phone call saying that the situation was all taken care of. On another travel trip, we lost our luggage (well, U.S. Scareways did). Amex immediately credited our account $175 to buy new cloths and even gave us a $150 check to replace our luggage.

Also, ordering stuff online is near impossible with a cash-only philosophy. If you're worried at all about overspending, get an Amex card. These are more like "charge cards" than actual credit cards (they require you to pay the balance in full each month so it doesn't get out of hand).

 

[pc1p]

Not 200K sitting around in cash to buy a home. Its called wire transfer/cashiers check.

I don't think he meant you literally have $200k in cash in your house, stuffed under a mattress or perhaps inside some buried Home Depot buckets in the yard...

The term "cash" is multifaceted... I believe in this instance it refers to money in any form, particularly of which that is immediately available (or extremely easy to liquidate).

 

[KidVermicious]

What would be silly is to use $200K cash for a house to save 3% interest when you can use that same $200K to make 5% on investments.

I couldn't disagree more completely, but it's a fundamental difference in philosophy and you're right that we'll never hash it out on a forum. Maybe someday we can pick this up next to a campfire with a good Scotch and some cigars.

Can we agree that the OP would be silly to draw out a couple-thousand-dollar loan on his truck when he has the ability to pay it off now?

 

[bofa]

I couldn't disagree more completely, but it's a fundamental difference in philosophy and you're right that we'll never hash it out on a forum. Maybe someday we can pick this up next to a campfire with a good Scotch and some cigars.

Can we agree that the OP would be silly to draw out a couple-thousand-dollar loan on his truck when he has the ability to pay it off now?

The loan is already a done deal and that wasn't the question. The question was if it would cause harm to pay it off in with accelerated payments and in all likelihood, the answer is no.

 

[Ol'Blue]

The Truth About Debt and Relationships - daveramsey.com



This will change you life forever if you take his stuff to heart. If not, well.......

 

[1engineer]

...Can we agree that the OP would be silly to draw out a couple-thousand-dollar loan on his truck when he has the ability to pay it off now?

Yes.

 

[jmbcary44]

read your loan contract, in certain cases yes it can be bad to pay off early. Some lenders have early payoff fees or penalties. Usually based on the rate and term and if it is beneficial to the lender (usually the case) So if your contact does not state early payoff penalties go ahead if you like and can afford to do so. You could always refi soemthing like this (use a good CU).

Double payments arent always the best option though just depends on your other debts and revolving credit/debt if you have any. Some times split payment (bi monthly) can save you more while adding an extra payemnt every quarter or 6 months.

For instance while not much I will save nearly $150 in interest on mine by making bi weekly payments and an extra $100 every 3 months, instead of double.

This is just an example does not work in all cases