Hi there. I have no credit (well I have a secured credit card), anyway I need to get a car as mine is certainly about to break down for good. Normally I would prefer to save money and get a car, but due to other reasons my savings have been depleted and I am now resorted to buysing a car using credit.
My credit union would give me a loan without a co-signer, but i have none! So I went onto Lendingtree.com and one I got was citifinancial that offered me a personal loan (unsecured) up to $5000 but at 28% interest.
That is high, but my plan is to aggresively pay it off within 6 months, and I am strong willed enough to do so.
So should I get this loan or are there any other places that I can look for financing? Thank you
2007-11-19 03:46:47 · 6 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Given the figures you supplied, paying that loan off in 6 months will cost you a total of $416 in interest with payments of about $903. Let's say you can shop around and get the interest rate down to 15%. Your total interest expense over 6 months will be $221 with payments of $870.
If I was in your position, I would replace the car now, so I would be sure to have a reliable car. That would be more important to me than spending a lot more time shopping around on the possibility of saving $30 a month for 6 months, and worrying about my car dying every day.
The good news is after 6 months, you should be able to take your monthly car payment and put that amount into savings each month to build your emergency fund back up.
For a loan of only 6 months, even a 28% interest rate is not going to kill you. But you better make sure there are no prepayment penalties involved.
2007-11-19 05:52:33 · answer #1 · answered by likepepsi 7 · 1⤊ 0⤋
You can do better than that. Well, if the car is really old, it's not a collateral and thus, unsecured credit is where you will have to go.
I question whether you can pay it off in 6 mos. Here's an idea: Try to save $2,500 in three months. If you can do it, just keep going until either your car dies or you have enough money. If you car dies first, then your loan will be smaller. Start today! Credit cards suck.
2007-11-19 11:59:15 · answer #2 · answered by georgerunde 1 · 1⤊ 0⤋
Even with bad credit loans specifically for automobiles typically have way lower interest rates than this! Since an auto loan is secured by the bank controlling the title of your car until you pay off the loan they can give you a much lower interest rate. This also means that your car is owned by the bank until you pay the loan off and they will repossess it if you skip on payments. Check local banks and especially credit unions in your area to see what kind of rate they might be able to give you for a loan specifically for an automobile.
2007-11-19 11:57:01 · answer #3 · answered by k monster 3 · 2⤊ 0⤋
Why are you looking at unsecured loans when you have collateral (the car you're buying)?
Get a good used car and ask the dealer about financing. If they want to sell the car, they'll help you get a loan. (I have used Carmax twice, with happy results.)
2007-11-19 11:54:53 · answer #4 · answered by Ted 7 · 2⤊ 0⤋
I wouldn't do it... many of these online loans at high interest like that charge extra fees for paying off fast.
you might not be able to pay it off before they let you, and will have to pay 28% longer than you want to.
2007-11-19 12:22:56 · answer #5 · answered by Anonymous · 1⤊ 0⤋
If you are planning on buying your car from any sort of dealership, they will likely have lending options for you that will be more attractive than that loan.
2007-11-19 11:59:03 · answer #6 · answered by emankcin 2 · 1⤊ 0⤋