Is the interest rate worth the credit history?

[MossRoad]

I'm pushing 60. NEVER bought a new car in my life, always used. Wife the same way, one reason why we think a lot alike even though we met in our mid 30's.

My father didn't buy his first new car ever until age 73

I don't want to dwell on the past for my son, but he realized in the grand scheme of things he most likely made a mistake buying a used Mercedes. That hopefully is a good thing

We bought one new car... in 1989.

 

[FPGT72]

Little confused by your post.

He could pay us as we'd just pay for it with cash, no interest charged on his end.

I agree with your comment about having a "record" of payments which is why I started with g thread.

Paying off a loan early with no fee is a no brainer IMO. My line of thinking is take out a 5 year loan, and pay it off early, have that payment history for credit on his that looks good, and he may be better off going that route.

That is what I am trying to say. Have him take out the loan, let it run for a month then pay it all off. He gets "credit" for having the loan and paying it off, and then there is no more interest. Win Win.

 

[scootr]

Re-read the original post. The kid was 16ish when he bought a 12ish year old Mercedes. He wants to buy a newER USED car that's more dependable.

No new cars involved.

My bad, and I apologize, the numbers I read seemed to indicate a new car?
My younger brother bought my Dad's low mileage MB and the repair bills are astronomical and they are frequent.
So my advice is the same.

 

[LittleBill21]

That is what I am trying to say. Have him take out the loan, let it run for a month then pay it all off. He gets "credit" for having the loan and paying it off, and then there is no more interest. Win Win.

except he paid interest for no reason

you want jump his credit score put him as an authorized user. my 6 year old has my credit score

 

[Torvy]

Best options for building credit without paying interest.

1) no fee credit card. Pay in full monthly.
2) 90 days same as cash deals. If you already have the cash to buy a bed (or whatever) use their sac deal and pay it off before interest accrues.

My oldest son did this wrong the other way. He didn't use any credit and when he wanted to buy a house he didn't have credit established. He's using a card for work travel now (personal card, they reimburse). He's an engineer, plenty of money, but lack of credit stopped him from buying.

I agree with others above. He doesn't need you to cosign. If he insists on getting a different car before this one is paid off, he may have to pay interest (but not because he wants better credit).

 

[plowhog]

We can float him a "in house loan" and buy a car outright, but he would be responsible for the monthly payments directly to us.

Everyone needs to find their own "right way" when it comes to money.

My experience has been that loaning money to family often leads to trouble or hard feelings. Maybe this is peculiar in my family only, I don't know.

What I learned is: if a relative needs or seeks money, I give it to them. No loans. No expectation of repayment. They are much happier. I am much happier. And it has never been abused.

Good luck whichever path you decide is correct!

 

[Hay Dude]

In my opinion, there is learning process that happens when you go out and get a loan for a vehicle that builds every time you do it. I've met too many grown people that don't know how to do this, and are afraid to even try. It's the little things that add up to being able to buy a house, or land, and become independent.

My parents helped me buy my first vehicle in High School with a $500 loan because I only had a grand saved up at the time. I had an after school job, so it wasn't a huge effort for me to pay them back. After High School, I sold it and joined the Marines.

Once I got settled into life on base, I decided that I wanted to buy a car. It turned out that every dealership, new and used, was more then willing to loan me money to do this. I shopped around, looked at a variety of vehicles before buying, and then went through the process of applying for my very first loan.

Eddie,
Semper Fi and thanks.
I truly mean that.

 

[Hay Dude]

I kind of like to lay back and read these discussions knowing there’s the “Dave Ramsey” corps and there’s people who know that there’s few if any ways to build a decent sized business without borrowing money (paying interest) on equipment to make a lot more money.

 

[LittleBill21]

I kind of like to lay back and read these discussions knowing there’s the “Dave Ramsey” corps and there’s people who know that there’s few if any ways to build a decent sized business without borrowing money (paying interest) on equipment to make a lot more money.

Maybe for blue collar type work. The world has changed. I know people making mid 6 figures with less than 10k invested in the beginning business. Some people can do it with a camera, others can click a mouse. Money is money. my side hustle did over 140k last year, less than 3k in costs, and we are normal people nothing special, just good idea's

My wife does advertising, she had a guy who sub contracts roofing. he did 400k last year, and never lifted a hammer.. work smarter not harder.

 

[paulsharvey]

I only made it part way down; but have he considered declaring bankruptcy? That upside balance is huge and will remain even when the car gets taken. I would Not loan or gift him anything if that is a real option.

Edit: I 'Thought' you said he borrowed $94k and now owes $120+k; but on a 2nd read, I'm guessing you meant milage....

If we are talking about being upside down by $30k plus, bankruptcy might be a option.

 

[Sprinkler Fitter]

This thought process needs to end. Under no circumstances should you pay interest if you don't need too, to raise credit score. I don't know why this was taught or ever conceived. I assume it came from a credit card company.

My credit score is currently 820, my credit score has never been under 750. I have NEVER paid a single dime in interest to anyone, no loans, nothing. That said I use credit cards for 99.9% of purchases and pay the balance in full..

so you paid cash for your house? That would be nice

 

[LittleBill21]

so you paid cash for your house? That would be nice

I did.

 

[paulsharvey]

Credit is not a good or evil thing. It accelerates things; so if used badly, it accelerates the crash and burn; but when used intelligently, it accelerates your growth. Don't know how anyone could save the $400k for an average home or even the $200k for a very below average market price home.

I have encouraged my 18 y/o son to get a credit card, and charge only gas on it, and pay it every month. At some point, he's going to want to buy a car, and the odds of anyone just having $18k or so, or more, just sitting around is very low. Heck, if your credit is too low, you may need a co-signer or massive deposit just to get a electric service set up in your name, or rent a place to stay.

Careful following Dave Ramsey, he has some good points for sure, but he's a fanatic, who makes money off selling his koolaid.

 

[Sigarms]

I only made it part way down; but have he considered declaring bankruptcy? That upside balance is huge and will remain even when the car gets taken. I would Not loan or gift him anything if that is a real option.

Edit: I 'Thought' you said he borrowed $94k and now owes $120+k; but on a 2nd read, I'm guessing you meant milage....

If we are talking about being upside down by $30k plus, bankruptcy might be a option.

Fell over dead laughing reading the bolded part...

Son bought the car when he was 17. By that age, he saved over 12k working.

He bought the car for $7.5k with his own money.

Car bought with 95k miles on it.

Title in our name, he's listed as the primary driver, under our insurance, and he pays for the insurance.

 

[Sigarms]

My younger brother bought my Dad's low mileage MB and the repair bills are astronomical and they are frequent.
So my advice is the same.

My cousin (who is like 79 now) had a MG.

Loved that car in the 80's, cool as can be.

The older I got, the less I thought of it being cool and more like a money pit per parts "when" you could find them.

Talked to that same cousin a couple of months ago, he completely agreed with me as he told me he was selling it but I didn't want it LOL

 

[Sigarms]

except he paid interest for no reason

you want jump his credit score put him as an authorized user. my 6 year old has my credit score

I have what I consider a pretty good credit score.

I'm not wealthy, but I / we owe no one nothing on anything.

It's great your 6 year old has your credit score, but exactly what does your 6 year old do with that credit score?

 

[CloverKnollFarms]

I did.

Same. But most people can't. However to the point, you can build credit without paying interest. You don't need a loan to build credit.

We haven't had a loan in 11 years, our credit score is 800+. We pay zero interest to maintain it

 

[Sigarms]

Best options for building credit without paying interest.

1) no fee credit card. Pay in full monthly.
2) 90 days same as cash deals. If you already have the cash to buy a bed (or whatever) use their sac deal and pay it off before interest accrues.

Son has had a credit card now for a couple of years. He pays it off, which is one reason why he has a good credit score IMO. He got the card per our suggestion,

Honestly, credit scores I find confusing. I tried to monitor mine at one time, and it actually made no sense when it went up or went down on what I was paying on. That said, generally little debt on our end other than mortgage on the house and land, which was paid off a couple of years ago.

You could deal with a guy who has a 700 score IMO and he could be a billionaire IMO and you'd never know it by looking at him. You can look at a house and figure the people are rich and they are basically stone broke and couldn't get a loan because they are maxed out.

That said, I'm defiantly a 5 year same as cash kind of guy depending on the deal LMAO!

From a business standpoint, I see credit as being only good. From my own personal experiences, only people who don't know how to handle their own finances are afraid of credit when it comes to business because they don't know how to reinvest their money back into their business to grow it.

 

[Sigarms]

you can build credit without paying interest. You don't need a loan to build credit.

Exactly how does one build credit without taking out a loan of some sort? Never figured out how for people to give me money for free.

I honestly have no clue how I got a high credit score, but early on in my life I owed money to a lot of people. No one got stiffed, but I did take out car loans and went into the hole big time IMO for a house and land loan after I got married.

That said, I didn't get married until later in life and had a somewhat good career in my mid to late 20's.

Take 2- 20 year olds with a baby and a house payment, I honestly can't see how they can really start digging themselves out of debt.

 

[CloverKnollFarms]

Exactly how does one build credit without taking out a loan of some sort? Never figured out how for people to give me money for free.

I honestly have no clue how I got a high credit score, but early on in my life I owed money to a lot of people. No one got stiffed, but I did take out car loans and went into the hole big time IMO for a house and land loan after I got married.

That said, I didn't get married until later in life and had a somewhat good career in my mid to late 20's.

Take 2- 20 year olds with a baby and a house payment, I honestly can't see how they can really start digging themselves out of debt.

Having a credit card, and paying it off monthly. Like I said… We have not had a loan balance in 11 years, and our credit score is very high. It’s only that way because we pay our bills on time and use a credit card to do it. You don’t need to pay interest