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Posted in Auto Loans
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mhcloyd

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What is the ideal length (12 or 24 or 32 months) and amount of a car loan to build up credit?

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Well, I believe that depends on your affordability. If you are trying to build up your credit, I would assume you don't have a perfect score right now. What I would recommend is to pay a large amount of down payment first and apply the loan from the credit union/bank where you have your checking/saving account at to get a better chance of approval.  Consult with your credit union/bank first before you go to the dealership. If you can get pre-approval from your financial institute first, take that with you and tell the dealer not to put any other inquiry against your credit... In terms of the length and amount of your loan, it depends on your income, financial institute will determine your affordable amount based on your current salary...

One thing I would suggest you to do is to apply for a loan with a longer length, then pay it off earlier prior to the scheduled date. That will definitely help you build credit

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There is no ideal amount. Get what you can afford. Make sure you get the lowest price for get the nonsense about building your credit. 

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I've had my car for about 11 months and my credit has raised by about 40 points total.  During the time since i purchased my vehicle I did receive a credit card and paid off a few debts.

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Car Loan

Anything more than 12 months is sufficient, IF you can handle the payments.  Whatever the term of the loan is insignificant compared to the affordability of the car payments.  If you're trying to rebuild your credit, it only takes one missed payment to erase any progress. 

Remember that some debt is good to establish ability to pay them, but I wouldn't suggest an auto loan term past 60 months as rates tend to increase dramatically.

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Car loan...

I agree w/ hardeight's response. The bottom line is how much you can afford. If your building your credit, the last thing you want to do is make even one payment late. So get what your most comfortable with. Also make sure you get as good an interest rate as you can get. I know that when you have bad credit it's hard to get a good rate but nothing ventured, nothing gained. Good luck! 

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