Getting a car coming out of college

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nelson
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Re: Getting a car coming out of college

Postby nelson » Mon Oct 15, 2012 5:17 pm

As a counter example I paid 12,988 (~14,000 after TTL) for a new Kia Rio 7 years ago. I still remember the sticker price because I did a lot of research before buying. It's been a good car and I don't regret it. Of course, that was after saving up enough to pay cash, but in the OPs situation a small loan that is paid off as fast as possible probably won't hurt too much.

So, if you really do want new, stick to the cars in the ~$15k range. The quality for inexpensive cars is much better than it used to be. And the real problem with loans isn't so much the loan itself as the fact that it can trick you into paying way more than you should (what kind of idiot pays $40k for a car he can't afford to buy for cash?).

alohabear
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Re: Getting a car coming out of college

Postby alohabear » Mon Oct 15, 2012 7:48 pm

nelson wrote:Of course, that was after saving up enough to pay cash, but in the OPs situation a small loan that is paid off as fast as possible probably won't hurt too much.


Given the OP mentioned he's graduating debt free (I'm assuming that means no student loans vs. loans that are now paid), financing a car that he can afford (by that I mean total cost, not monthly payment) would be a good way to build credit history.

stannius
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Re: Getting a car coming out of college

Postby stannius » Thu Oct 18, 2012 1:36 pm

I bought a new truck 3 months into my first post-college job. I paid it off in less than a year. I agree with some of the comments:
1) This probably won't hobble you financially for the rest of your life, if everything else is in order
2) Don't use this as an excuse to overdo it (see the essential caveat in point 1)
3) Try to stick to something you can pay off in less than a year.
4) I like your plan of waiting until a few months into the new job - by then you'll have a lot better feel for everything.

dontgopoor
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Re: Getting a car coming out of college

Postby dontgopoor » Sun Oct 21, 2012 6:16 am

alohabear wrote:
nelson wrote:Of course, that was after saving up enough to pay cash, but in the OPs situation a small loan that is paid off as fast as possible probably won't hurt too much.


Given the OP mentioned he's graduating debt free (I'm assuming that means no student loans vs. loans that are now paid), financing a car that he can afford (by that I mean total cost, not monthly payment) would be a good way to build credit history.


I'd like to see someone who works in credit underwriting comment on the value, today, of building credit history for someone this young.

The idea of paying interest to "buy" credit history seems a very poor decision unless the borrower is trying to repair a bad credit history (and even then I think that paying monthly balances in full, with a secured line of credit, is a much better way to go).

I recall that recent college graduates with no credit history or little positive credit history and a good job can get car loans and even home loans (I did both).
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nelson
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Re: Getting a car coming out of college

Postby nelson » Fri Oct 26, 2012 12:30 pm

dontgopoor wrote:The idea of paying interest to "buy" credit history seems a very poor decision unless the borrower is trying to repair a bad credit history (and even then I think that paying monthly balances in full, with a secured line of credit, is a much better way to go).
I agree. The only reason I thought the (small) loan might be okay is he didn't have the cash and did have a good job. The interest is just the price paid to drive the car now rather than 6 months from now. And as far as building credit history, that can be accomplished by paying your bills on time (avoid negative history) and carrying a credit card that is paid off every month (build positive history). Neither of these options costs anything in interest.

Tightwad
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Re: Getting a car coming out of college

Postby Tightwad » Fri Oct 26, 2012 1:38 pm

dontgopoor wrote:I'd like to see someone who works in credit underwriting comment on the value, today, of building credit history for someone this young.

Okay, I'll be your huckleberry...

If I recall, the OP is 22 so it's time for him to stand on his own financially. Credit cards & auto loans are very easy to get for recent college grads. If he plans a family or home purchase in the next couple of years, I'd like to see a more history than just a credit card with a starter limit & a car he probably can't afford. The higher his income & the longer his credit history gives him purchasing power, if you will, for favorable terms on future loans.


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