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Posted in Auto Loans
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AmericanDream23

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When should I take out a car loan?
Hello I am 23 years old and I have a score of 671... not the best but not the worst. I have a bad itch to get a new car and I've been looking around like crazy. I was thinking of taking out a car loan of $5,000 just to use as a down payment towards a car I want. Is this something I should do? Or should I wait to do this and just save up my own money? Please someone help me!

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I think you are not being realistic here, talking out a loan for a down payment? For one thing, the first loan of 5k could not be for an auto loan if you would need it for a down payment, it would need to be a personal loan and that would most likely need to be an unsecured loan which can be hard to get without great credit and come with higher rates even with great credit. In addition to this issue, you would have lower your credit scores by getting the first loan and also cause issues with your "debt to income" and that may make it impossible to get the second loan. Then you would have two loan payments every month for the car plus a full coverage insurance payment that won't be cheap. Be careful with your ways of thinking when it comes to finances and spending, you are heading down a road that leads to future financial hardship. I want to add that most auto lenders use FICO scores, not the scores that you get on here and they can be very different sometimes. The information on your reports is as important as scores. The time at your current job and "debt to income" is very important and so on. Live within your means for now and get something reasonable. Wise decisions today will lead to the car that you want and can afford in the future.

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