When I was in college, I had a car that could be said to be ” rodent .” It was clear that the day would come when I needed something more serious and reliable, but the problem was that I did not want to buy a car on credit. What did I do? As a fool I am collecting money just to buy a used car for cash. I had to make money from the money I got while playing in college and in my first job right after college.
When I finally had enough money, I went looking for my new car. If all this time I was thinking about buying a used car, then as a result, I changed my mind and came up with the arguments for not buying a used car. Following this change of position, I purchased a new 2010 Honda Civic. Despite the fact that I was able to buy it for money, I bought it on credit. Why? Read on for the reasons why I came to this decision.
I needed to improve my credit rating
One of the factors that influence credit rating is the types of borrowed loans. This factor represents only 10% of the credit rating, but it is still significant. Loan types include mortgage, credit card, car leasing, as well as student loan. I had graduated from college without a student loan and am incredibly happy about it. I’ve had several credit cards, but I’ve successfully paid for all of them. I’ve never had a mortgage, but I plan to borrow it in the next few years. In order to maximize my credit rating and get the best interest rate on my future mortgage, I also needed to apply for car leasing. That was one of the reasons why I decided on a car loan.
My loan rate was insanely high
After the global economic crisis it was not easy to get car leasing. Even if it could be obtained, its interest rate was abnormally high. For these reasons, car dealers also did not have a great deal of car sales, and thus offered to buy even new cars. At the time, those offers seemed tempting and I decided to try one of them. I had already secured a checkbook, in which case my savings would be too low. After reviewing my application, credit history and financial situation, the car of my choice was offered on more favorable terms than I had planned. That was great news, because the terms of my savings account were also great at the time for my car loan. In a word, all the conditions at that time provided a good deal for my future mortgage.
It is good that there is money in the bank account
Auto loan meant that I had to keep my car loan payment in a savings account. At that time, my savings account already had six months of emergency savings, but we can never know what the future holds for us. Thanks to special conditions, as a result, I was able to hold the auto loan funds in a separate savings sub-account. This account offered me to make credit payments automatically, which I also use and forgot about them all the time, relying on sub-account options.
Is such a decision appropriate for everyone?
Of course, this may not be as successful as the situation described, but in certain circumstances it is sometimes important whether the car is purchased on credit or for cash. As experience has shown, in most cases, buying a car for money is more profitable than getting a car loan, but as you can see, there are exceptions when it is more profitable to give credit directly.