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Boost630

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Pay Cash for new auto or pay off all credit debt and finance vehicle?
I have a 630 credit score with no black marks except carrying too much credit card debt (Rating D). I can currently purchase a needed new vehicle with the following options:

1) Pay cash for the vehicle and continue to pay down my credit card debt.

2) Pay off all outstanding credit debt and partially finance the vehicle at a lower rate (How long will it take for the improved loan rate to kick in?)

Any help would be appreciated.

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If your debt is all credit card debt then it will help to have a auto loan showing on your credit report. I would pay down some debt and partially finance the car.

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 I would buy an older model car cash ($2-4K), do not carry collision coverage, pay off cc debt with any remaining cash, transfer any remaining credit card debt to a zero percent card then pay off your credits cards before the interest kicks in (usually about 18 months).

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#2

Credit card rates are usually much higher than a car loan rate, so carrying a balance on a credit card is never a good idea.  Also, auto loan debt will actually increase your credit score slightly because it is "good debt" whereas credit debt is not. 

I am assuming the amount of credit card debt you have is substantial as by not paying it off, you can pay cash for a car.  So, if I were you I would pay off the cards and partially finance the vehicle.  You may not get a great rate, but you will be building equity and helping your score for your future by ridding yourself of the bad debt.  My two cents anyway.  

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Pay off credit cards first!

Simple answer, pay off the credit cards, wait a month (don't use them) and then finance the vehicle.  You need to wait a month for your credit score (credit cards report $0 balance) to improve.

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