[USER]

Hi everyone,i would really like your thoughts on our situation. We are new immigrants and has 100k in savings. We would like to purchase CPO honda pilot car (35k) or a bnew (40k) in CASH.

Others are really not advising us to do this because we need to build our credit score but thinking the 6.7% APR,its still big amount for us to let go on interests.

Our emergency fund will also come from this 100k savings.

[Heather]

Absolutely pay in cash! And I know you may be set on those vehicles, but I bet you could find a really great vehicle for less than $35,000 to $40,000.

[Prasad]

Can’t you consider a used car instead, pay cash and build your credit history elsewhere?

[Denis]

Take a loan, pay the interest of the loan with the interest of the capital invested.

[Tony]

You could get the loan. Make sure there is no prepayment penalty. Then pay it off in full.

You would pay minimal in interest. Credit card is the best way to raise your score.

[Stewart]

Can you instead get a credit card with a low limit that you make a few purchases on a month and have it set up to auto deduct out of your bank account each month so you pay on time each month?

[Golden]

I would do used car with cash. We found a CPO 2021 Pilot with 15,000 miles, for $30,000. There are deals out there.

[Sherri]

Pay for it in cash. It’ll drive a lot better and then build the savings back up.

[Bill]

6.7% is ridiculous APR for the car. I’d say go the cash route for the CPO and build your credit another way – maybe start with secured CC or something to get you doing as new immigrants.

[Janel]

For everyone saying to just build credit with credit cards: I thought that part of your credit score is diversification – meaning you could strengthen it by having credit cards with a low balance/paid off each month AND a loan with installments.

There are dings when you open accounts from the hard inquiries and also when a loan is paid/closed because that credit history (another factor) falls off your list.

Is this an incorrect understanding of how FICO scores work?

My suggestion would be to pay cash for most of it and finance as little as they will let you, ideally $2000-3000, over 12-24 months. Pay that tiny bit of interest to build your credit.

AND use your credit card, keep the balance <30% of the limit, and pay it off each month.

[Jennifer]

Just because you get a loan doesn’t mean you can’t pay it off fast. You could put half or more cash down, loan for the rest.

Pay it off in a few months. Just make sure there’s no early pay off penalty

[Juliett]

Pay mostly cash for a new one.
Finance only like $5,000 for 24 months or $2,500 for 24 months.

That will build your score and you won’t pay a lot in interest.

The least amount possible they’ll allow.

[J.C.]

Go with cash. Raise your credit score some other way, like using (and paying off in full every month) several credit cards.

Personally, we use 5 different cards.

[Brian]

Just get a credit card and use it to pay for regular bills. And pay it off each month. No need to take out that loan.

If you can’t get approved for a credit card, ask your bank or credit union about getting a secured card.

[Brian]

Look up Dave Ramsey.
Broke people are telling you to go in debt. Don’t do it. Pay cash.

[Nancy]

Can you get a much older car than you are looking at? Yes, you may need a repair fund too in the long run – but there’s plenty of cars that will transport you for a whole lot less than 35k!

[Brian]

Anyone who tells you to pay interest solely to build your credit score is giving you bad advice. Yes, build your credit.

No, don’t take on debt where you don’t need to take on debt to do so.

I agree with others; pay cash for this car and use credit cards that you pay off every month to build your credit.

[Laura]

35k is too much for a used car. I was stuck on Honda as well and ended up buying a newer model Mazda 2021, 20k miles for under 24k.

You can put more cash down and only finance a smaller amount, about 5-7k if you want to build credit, that way the interest is not as much.

And you are not depleting your savings more than you need to

[Author]

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