Car loan advice. What would look better on my credit report?

Question

Here is my situation. I have about 15K worth of credit card debt. I've got all of this on 0% apr cards for the next year (while I pay it off). I have about 12K coming my way from my car which I'm going to sell. I'm planning on buying a new car. Would it be better to use the 12K as a down payment on the new car, or buy the new car with little to no down and pay off the credit cards? I'm wondering this from a credit perspective, not from a saving money persepective. Thanks!

Answer 1

If the 15-k on your credit cards represents over 30% of your limit? Pay off the credit cards first and then wait 45-days for the bureaus to update before you go buy the car.

If the 15-k doe's not represent over 30% of your limit? It really doe's not matter because your total debt will not change.

Being in the vehicle finance business myself, I would recommend that you use at least half of the money as a down payment.

Do not reveal to the dealer that you are going to put any money down until you have agreed on the purchase price of the vehicle.

Answer 2

The best idea. Do not buy another car until you pay off at least 7k of the debt. If you do have to buy the car, pay off the credit cards. The auto loan is fixed for X years.
Also do not take a loan past 60 months.

Answer 3

From a credit prospective, it's about the same. you would have the same net debt load either way, so there's no difference between those two options. Do whatever makes sense financially. Just don't open any new credit cards, or go closing the cards when they no longer have 0% intrest. That is what would kill you. Also, check your bill to see if you have "two cycle billing." If you have that, you need to pay down your CC bill a month early.

Answer 4

I say use 1/2 the money down on the car and finance the rest then use the balance of your money to pay down your credit cards .. that is the best thing for your credit!!

Good LucK!