Financing a car, advice please...

[CollegePlayer]

Im in college and would like to invest my poker earnings into purchasing my first automobile. The thing, though, is that I of course have no credit and I am curious as to what options I should expect in terms of financing. After all the fees I expect the total cost of the car to run me about $16-17,000. I currently have $21,000 in a checking account, with a seperate savings account for money that will go towards taxes in January. The other negative factor is that I have no job, I doubt the dealer will understand that internet poker is a profession.

So, do you think it will be posible for me to put down maybe $10-12,000 and drive away happy? Or will I have to wait until I can safely pay completely in cash? I am making about $600/wk from poker right now, if that matters in your math.

Thanks...

[Oski]

go get some crap job so you can include it in your financing report. With 10,000 down, you don't have to show much.

Quit your job soon thereafter.

[CCass]

Wait until you can pay cash. You don't need a monthly payment hanging over your head with no steady income.

[GuyOnTilt]

Wait until you can pay cash.

I'd advise against this. I'm 20 years old and am really regretting not establishing my credit history earlier. It's a real pain. He should definitely get the car financed and make his payments on time every month.

GoT

[cardcounter0]

Do both. Wait until you can pay cash. Then finance the car. Make all payments except the last one. Wait two years (loans of shorter duration don't effect credit rating). Make final payment. You will only be paying two years interest on amount of one payment.

Viola! Minimal interest expense, no payments hanging over head, good credit rating.

[pudley4]

Even better - find out how much you need to put down to get 0% financing. Put the rest in an interest-bearing account. Have the payments automatically deducted from this account each month.

Perfect credit and you're making money too.

[Ray Zee]

learn to buy and own things you can afford. get a car you can buy and not have to insure for collision. establish credit by getting credit cards and always paying off. that is enough until you get ahead more. no one loans an serious money with you showing three years tax returns and a steady stream of income. thats what to shoot for. but no body gets rich by borrowing. you get rich by investing. not spending large amounts of your net worth on consumer goods. food for thought.

[cardcounter0]

You lose thousands the instant the front wheels of your car leaves the dealer's lot.

A car is a necessary evil. Buy modest. I think a new car is okay, if you plan on caring for it and driving it until the wheels fall off. Might check out slightly used cars also, let some other fool take the initial huge depreciation hit. Not a big fan of really used cars, because what you save in money, you usually lose on repairs or getting stranded.

Peter Lynch pointed out in his book "One Up On Wall Street", that in the early 70s if you had bought the then new brand Subaru car for $6000, five years later you would have an old beat up five-year-old Subaru. That same $6000, invested in Subaru stock, would have made you a little over $1 million in five years.

Food for thought.

[moondogg]

[ QUOTE ]
I'd advise against this. I'm 20 years old and am really regretting not establishing my credit history earlier. It's a real pain. He should definitely get the car financed and make his payments on time every month.


[/ QUOTE ]

If you want to establish a credit rating, get few credit cards that you use for everything and pay it off in full each month (i.e. you pay no interest). Make sure you have enough credit across all of the cards so that you're total charges against each one each one is less than 40-50% of your limit for that card. Ask them once a year to bump up your credit limit.

This ends up being much cheaper way to build credit than paying interest for years on an aggressively depreciating asset. IMHO, if you're going to pay interest on something, make sure it's going to go up in value.

(Of course, all of this is moot if you can get 0% interest for the life of the loan, no strings attached. In that case, finance every penny you can and make the absolute minimum payments, saving the rest in an interest-paying account. Anytime you can get someone to loan you money for an extended period of time with no interest, you are pretty much making money. Given this, nothing is ever free, so they are probably f-ing you over somehow)

P.S. Example regarding credit cards: When I graduated college at age 22, the only thing on my credit report was a deliquient phone bill from junior year. The only card I could get was a $300 "secured" card (not actually credit, you have to front the $300, just looks like a credit card on your report). When I was 23, that me got a $200 credit card from Capital One. When I was 24, those cards got me an $2000 Delta Skymiles American Express, and then a much bigger BOA Visa. At 25, BOA removed the limit. 3 years, damn near unlimited credit, and I never paid penny of interest on any of it. Just applied for a mortgage, and they said that my credit was as good as they had seen for a 20-something, despite the deliquient phone bill.

If I had financed a car, it too would have helped my credit, but I would have been flushing thousands of dollars down the drain on something that would have lost more than half of it's value. One mortgage broker offered the advice that I pick up a car loan to further build my credit, so of course I hung up on her. Sure, more credit history more gooder, but it's a pretty damn expensive way to go about it.

If you have to finance the car as a practical means to afford it, that's fine. Just be aware that you are paying significantly more than the loan amount.

[moondogg]

[ QUOTE ]
learn to buy and own things you can afford. get a car you can buy and not have to insure for collision. establish credit by getting credit cards and always paying off. that is enough until you get ahead more. no one loans an serious money with you showing three years tax returns and a steady stream of income. thats what to shoot for. but no body gets rich by borrowing. you get rich by investing. not spending large amounts of your net worth on consumer goods. food for thought.

[/ QUOTE ]

And again, of course, beating a dead horse, read "The Millionare Next Door".