When buying a car there are good car dealers and bad car dealers.  There are those that finance using Manufacture Financing and those who use Finance Companies to do their financing.  For those who use Finance Companies this can hurt your credit scores considerably.  Using any Finance company will hurt your credit scores. Using Manufacturer Financing will improve your credit.

But let’s talk about the car dealerships that offer “Bad Credit Ok” or “We will help you restore your credit”. Usually this does not work because the car dealership will only report if you fail to pay on time.  Now, if you understand credit as well as I do, then you will realize that won’t help at all… ever, because they won’t report the good payment history, just the bad payment history if you forget, slip or fail to pay on time.

So, avoid these game players and stick to a car dealership that offers Manufactures Financing or get your own at a credit union or bank before you go shopping and improve your credit scores.

Lawrence,
Russ and I had a question that we were wondering if you could answer.  We have $8500.00 in credit card debt.  I think our interest rate is around 8%.  We have two trucks that we could sell and pay off the card.  We are wondering though if it would be smarter to do that and buy another vehicle that we’d have to get a loan for or keep one of the trucks and just pay down the card when we have extra money?

Thanks!
Mindy

Hi Mindy,

Thanks for the question!

It sounds like you only need one vehicle and not two. If this is the case, then selling one and paying off your credit cards looks to be the best scenario for paying off debt, and increasing  your credit scores at the same time.

Points to consider:

1. If you sell both vehicles but then have to get a loan on a new truck, your scores will drop because of the new account. Your scores are hit 7 different ways with a new account.
2. Yes, debt to credit limit rations will definitely be helped by paying down credit cards. I would make sure to pay all cards that are over 45% debt to credit limit ratio; then pay them down further as you have more money to put toward them; this will also help increase your credit scores.
3. The best recommendation is to sell the most expensive vehicle and put that money toward bills. As you pay off your bills, save for a new truck, and then purchase it with the available cash that you have saved. You have eliminated debt and increased your credit scores at the same time.

Hope this helps.
Lawrence M law