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JeepBuyer

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I have 4 options for buying a new car, what will do the most to rebuild my credit?
My Transunion credit score is blank (thin file), I have no open accounts for probably the past 10 years, I stopped using credit cards after getting into trouble after college about 20 years ago. My Equifax score is 524. I have ordered a new car, it will arrive at the dealer on Monday. I have been dealing with financing with the dealer the last 3 days. Here are my options:

Right now I have $2k down as deposit.

Option 1, I pay the remainder in cash: $44k - I assume this will do the worst / nothing to improve my credit.

Option 2a: (tentative not approved) put $18k additional down ($20k total) and $24k will be covered by an 8.5% loan with an additional fee of $395 for the loan (fair or should I try to get that $395 waived? I cannot tell if it is a salesman tactic).

Option 2b: If I get denied the above, my only financing option from dealer is pay $2100 for Chrysler financing on the $24k at an APR of 17%.

Option 3: similar to Option 2a, take the $24k loan for 8.5% and create a cash-secured loan from my Credit Union at 3.5% for the remaining 18k, essentially creating 2 loans for the same vehicle.

Option 4: Tell the dealer "no" on their crappy financing options, try to negotiate harder with the dealer on price (they currently have a $999 non-negotiable document fee - aka dealer fee) and tell them I will get them a check for the full $44k by creating a cash-secured loan from my credit union for 3.5%. I will ask for another $500 off on price or I want my $2k deposit back and I am walking and just hope they don't call my bluff. Worst case I go back to them with my tail between my legs and pay the price they are offering.

My current savings is about $49k so going option 4 would leave me with a $5k buffer. My gross income is $10k per month, and my rent is only $1350 with maybe another $500 in month utilities/insurance/etc..

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Try your credit union and see about getting a pre-authorized voucher for getting the vehicle.  Repaying that loan will work towards rebuilding your credit  The lower interest rate from the credit union is a big plus. So option 4 may be the best.

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Personally, I'd be walking away from a brand new car deal (especially with dealer financing) and check the deal you can get with the credit union for a Certified Used Car.  You'd still have a good vehicle that will last approximately 10 years and it will be at a lower price that you just might get financed..  When I went car shopping 10 years ago, I had in mind a maximum I was going to pay (had sold my land and mobile home) and stuck to it.  Walked away from several offers.  Then I saw a one-year-old Buick Rendezvous that would meet my needs, but they wanted $3000 more than my top limit.  I was ready to walk, but they talked to the boss and I got it.  There was absolutely no way it could be financed (my score was in the pits) but I got it.  Drove that vehicle for 11 years and about the time it was starting to need some big repairs, I had my score up to where I was able to buy a new vehicle at a very low interest rate this past summer. You can always buy a can of new car smell spray if that's important to you but I want the maximum vehicle I can get within my means because I'm on a fixed income that's even less than half what you earn.  You can do brand new after building your credit score and the articles and tools on this site will help.  They did for me.

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JeepBuyer

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I have done the car the drive into the ground thing before, my current car is 13 years old, not really the advice I was looking for.  I listed 4 options to choose from, you didn't choose any.  I am looking for advice to rebuild my credit, I am not looking for advice on how to spend my money.

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Number 1 or 4 are your best bet. 1 is best to avoid interest and save the most money. Option 4 will save you some interest and will increase your credit score over time,  provided you make timely payments.

I agree with jwsister's advice though. We wouldn't be doing our due diligence if we didn't provide full answers, even if it's not always wanted or appreciated.

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$999 is a high document fee.  Very high.  Or is that the destination charge that all car companies charge.

I would suggest building credit another way.  Get a secured card, or $500 limit card through your Credit Union, and just use it for incidential like the gas for the car.  8.5% or 17% is way too high.

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