Buying a Car

User Forum Topic
Submitted by waitingpatiently on January 4, 2009 - 4:01pm

Just a question....

How much does buying a car hurt your credit score? We will be paying off one loan (6%) and getting another $15000-$20000 loan (on a slighty used car). Should we pay both cars off to save our perfect credit score? We will be purchasing a home in the next year and will have about 50% down. Besides our car we have no other debt. FWIW...we are the type of people that buy cars every 10 years.

Thanks

‹ a visual guide to the Housing/Financial Crisis PE group buys IndyMac (taxpayers get shafted) ›
waiting this is a very good
Submitted by SD Realtor on January 4, 2009 - 4:08pm.

waiting this is a very good question for your mortgage broker because it impacts your ratios as well. How much of an impact it makes will vary person to person because it will depend on your own income/debt numbers.

If your score is perfect,
Submitted by Eugene on January 4, 2009 - 6:28pm.

If your score is perfect, buying a car should not affect your homebuying capability much. Everyone beyond 720-740 gets basically same rates.

I do not think it has any
Submitted by donaldduckmoore on January 5, 2009 - 2:49pm.

I do not think it has any significant impact on your score. Besides, you are paying 50% downpayment and no lender would resist buyers like you.

Getting a car loan
Submitted by FormerSanDiegan on January 5, 2009 - 2:56pm.

Getting a car loan immediately before getting a mortgage is not a great idea. Your credit score will drop a bit and your debt ratio will be higher.

When I obtained a car loan 3 years ago I watched my credit score drop about 40 points to about 740. It took 9 months or a year to get back t where it had been.

If you are still 12 months away, it does not really matter much on your score, but impacts your DTI ratio. If you will be purchasing at low DTI anyway (e.g. 25%), then the only thing to consider is your score.