High interest rate for car

[johnins2009]

Scenario:

A reliable transportation is needed but low/bad credit. The goals are to finance a car because no money to pay cash and the other goal is to start rebuilding credit.

Option:
Get a high interest loan to help rebuild credit.

Is this smart to do?

[dannin]

That would probably be a more expensive way to build credit. Is there any way you can put off buying a car for a few months and sock a couple thousand away to buy yourself an inexpensive car?

I hate advocating credit cards, but if you can responsibly manage a credit card, it should help your credit. If you used it to buy the things that you are currently buying, you don't over spend, and pay it off every month, then it should help your credit without costing you extra like the higher interest on the car loan would.

This assumes that you have already taken care of the issues that damaged your credit in the first place.

[maat55]

I would find an 500 dollar car and pay cash before I would borrow or pay high interest. If you look around, you will find a very cheap car that will work in the short term while you save more cash to upgrade.

Do not use a regular credit cards or high interest loans to build your score, use a limited gas card(pay in full) first.

[AmbitiousSaver]

Short answer - no. I won't even look at a loan for anything with a APR higher than 5%.

I'm with Maat55, don't use credit cards or high interest loans to build your credit score. If you can even make the payments, all it will get you is a nice score and a LOT of debt.

[sawlyeee]

Hope I'm not too late to help. DO NOT DO IT!

I have a friend who got a 17% car loan. Worst decision ever. Kicking himself everyday ever since then.

I would save up and find a cheap and reliable car off craigslist.

[nmboone]

I have a cousin who once got an auto loan for 26% interest! Needless to say, it was repossessed not too long later.

I don't get what's so bad about building credit with a credit card as long as you are paying it off EVERY SINGLE MONTH. If you don't think you can do that though I wouldn't go that route.

[PetMom]

I am fascinated with the $500.00 car theory.

With car expenses mounting so much (inspection, tags, insurance, repairs, recalls, etc.) are there any
cars that are considered that reliable when they get to the $500.00 range?

I am sure the ins. is probably cheaper, but have read the theory that really inexpensive cars need repairs often enough that they tend to eat up the savings.

How do you know what care the person gave the car (eg oil changes).

Are these type of buys usually found on craiglist.

My sister got a $1500.00 old beat up pick up truck and she was amazed how people got out of her way when driving around and never tailgated her or cut in front of her. We thought that was the lowest financially you could go and have any type of reliability.