Get an Auto Loan to help credit only?

**littleroc02us** · 01-12-2011, 10:30 AM

Why wouldn't he say that, he's trying to sell cars with loans. Do you realize they make their money off of financing and leasing. What's wrong with a 750 score? No, don't take a loan to buy a car.

**scarfase99** · 01-12-2011, 10:35 AM

well, i think he knew i wasn't going to buy the car (it was used on his lot), but i know what you're saying...the reason i believed him, was when i mentioned to another car dealer that i had never had a large loan, he mentioned that it might cause problems getting one even if my credit score is good.

i'm definitely leaning AGAINST it now, but still throwing the idea in my head of getting the loan, and then investing that money in the stock market or something....then get the credit benefit and possibly make some money

**littleroc02us** · 01-12-2011, 10:51 AM

Originally posted by scarfase99 View Post

well, i think he knew i wasn't going to buy the car (it was used on his lot), but i know what you're saying...the reason i believed him, was when i mentioned to another car dealer that i had never had a large loan, he mentioned that it might cause problems getting one even if my credit score is good.

What a bunch of BS. Think about it, your getting advice from a car dealer about a home loan. You don't even need a credit score to buy a home. Here are the requirements for a loan that is underwritten by a bank..

1.. Steady job for 2 years
2. Rented an apartment
3. Debt/Income ratio

Other banks will easily loan you money with a 750 credit card and at least a 20% downpayment with a decent income.

**scarfase99** · 01-12-2011, 10:55 AM

no, this is for a car loan, sorry to clarify.

my point was, that having THIS car loan would benefit my credit report since it would show a large loan amount, so in the FUTURE when i buy a house.

totally irrelevant?

**scarfase99** · 01-12-2011, 10:56 AM

no, this is for a car loan, sorry to clarify.

my point was, that having THIS car loan would benefit my credit report since it would show a large loan amount, so in the FUTURE when i buy a house.

totally irrelevant?

**bjl584** · 01-12-2011, 11:07 AM

Do you need a car?

If not, then I wouldn't finance one under the assumption that it will improve your chances of securing a mortgage at some point down the road.

Try this:
Keep saving your money until you have at least a 20% downpayment for a house. At that point, walk into your bank and tell them that you want to apply for a mortgage. Your 20% down payment plus your 750+ credit score are all the tools that you will need to get approved.

**skydivingchic** · 01-12-2011, 11:56 AM

Here are the things that make up your credit score:

�35 percent - An individual's history of making credit payments on time
�30 percent - The total amount of debt being carried along with available credit
�15 percent - The age of an individual's open credit lines (more history is better)
�10 percent - The frequency with which someone applies for new credit
�10 percent - Wild card factors such as the types of credit lines

The only one of those factors that a car loan will affect vs say having a CC and paying it off on time and in full each and every month (i.e. not paying interest), is the last one - types of credit. That is only 10% of your score. So at most you would see some minor improvement in your score.

The first guy advised you to take out this loan, pay it off quickly, and then it would stay on your report "forever". That is simply not true. Stuff stays on your report for 7 years after the last activity. So if you get a loan and pay it off in 5 months, it would only be on your report for ~7.5 years.

Finally, a credit score of 750 is pretty good. According to most websites I've seen, if you have a score of 760 or above, you will qualify for the very best rates, so you are right there. Also the three bureaus have different scores, so your other scores may be higher.

I would not take a car loan that charges any interest just to increase your score.

**jpg7n16** · 01-12-2011, 12:09 PM

The stupid things people do in the name of a credit score...

The salesman is doing everything he can to convince you to buy from him. Not only do you 'need' the car, but it will improve your credit rating too, and the chicks will love you, and your boss will be impressed. It's a need, smart, sexy and impressive. You HAVE to buy it now!!! (from me, so I get a commission)

How else do you expect him to try and convince you that buying that car is the right move financially? If he can sidetrack your mind onto - well how would it affect my score, he'll keep your mind off, "Do I really need to have this much car?"

I think it's a sales tactic. He likely gets a higher commission if he can convince you to finance through the dealership.

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Let's say the loan was at 8%. Over those 5 months, you would pay $401.77 in interest. At 5%, it's $251. That would pay for a nice comission.

And how many 'credit score' points do you think that $402 will buy you?

**scarfase99** · 01-12-2011, 12:53 PM

thanks guys, very beneficial information. what a great forum you have here! I think i'm going to pass on the loan

**littleroc02us** · 01-12-2011, 01:14 PM

Originally posted by scarfase99 View Post

no, this is for a car loan, sorry to clarify.

my point was, that having THIS car loan would benefit my credit report since it would show a large loan amount, so in the FUTURE when i buy a house.

totally irrelevant?

Still BS, you don't need a credit score to get a home loan...

Get an Auto Loan to help credit only?