I owe $8,000 on credit cards, spread over 4 accounts. I have $5,000 in savings to either pay off debt or put toward a car. My mortgage is the only other debt, and we make $90k a year. I want to boost my credit score fast so I can get a car loan. How should I use the $5,000 to make this happen? Any advice?
Use the $5,000 to buy a car outright. Start aggressively paying off the credit card debt and build up your credit score. Once you’re in a better place financially, trade that car in for something newer.
@Payne
This is the way. Buy a used car with cash and focus on clearing your debts. Also, maybe cut up those cards to avoid adding more debt.
@Payne
Buy a cheap car outright. You’re not in a position to take on a car loan. Work extra hours, pay off the debt, and upgrade later.
@Payne
I get where this advice comes from, but $5,000 cars can be a gamble. Repairs might cost more than the car itself. Personally, I’d clear the credit card debt and look into getting a reliable new car, even if it means financing. A Corolla hybrid can save you a lot on gas and give peace of mind.
@Dai
With a 545 credit score, they’ll likely face high interest rates on any car loan. Clearing some of that debt first would probably help more.
@Dai
A $500 monthly car payment? That doesn’t seem like good advice, especially with the debt they already have.
Noe said:
@Dai
A $500 monthly car payment? That doesn’t seem like good advice, especially with the debt they already have.
If it’s for a brand-new, reliable car that gets great mileage and lasts over 200k miles, it might actually save money in the long run. Older cars can be risky and expensive to maintain.
@Dai
But not everyone can afford dealership maintenance costs or the risk of a hybrid battery replacement. You can find used cars like a Prius that are cheaper and still fuel-efficient.
Noe said:
@Dai
But not everyone can afford dealership maintenance costs or the risk of a hybrid battery replacement. You can find used cars like a Prius that are cheaper and still fuel-efficient.
New cars give peace of mind. Used cars, no matter how inspected, can hide issues. For someone like OP, who can’t afford surprise repairs, a new car makes sense. It’s about minimizing risks.
@Dai
Minimizing risks doesn’t mean taking on huge debts. $5k cars can last if you do your research and get a pre-purchase inspection. It’s about being smart with what you have.
You can’t afford a car payment with your current financial situation. Buy a car for under $5,000 and focus on paying off the credit card debt first. Adding another loan won’t help you right now.
Gray said:
You can’t afford a car payment with your current financial situation. Buy a car for under $5,000 and focus on paying off the credit card debt first. Adding another loan won’t help you right now.
You’re right. I was thinking that if we pay off $1,000 a month toward the debt, we could manage a $500 car payment. Our mortgage is $1,800, and it’s tight, but not impossible.
There’s no quick fix for your credit. Buy a cheap car with cash and work on paying down your credit cards over time. That’s your best option.
Look for a $5,000 car from a reliable brand like Toyota or Honda. Skip the car loan for now and tackle your credit card debt first. If the car is more of a want than a need, use that $5k to pay off some of your debt.
@Bryce
My current car might last a few more months with some cheap repairs. I’m thinking I can pay off all the credit card debt in two months if we stick to a strict budget.
Having $8k in credit card debt and thinking you can afford a car payment is next-level optimism.
Life happens. Don’t beat yourself up. Focus on paying down the debt first, then save for a better car. It’s hard, but you’ll thank yourself later.
Joss said:
Life happens. Don’t beat yourself up. Focus on paying down the debt first, then save for a better car. It’s hard, but you’ll thank yourself later.
We’re 23 and learning as we go. I’ll admit, the desire for a nicer car is tempting, but we know better now.
You’re stuck in a cycle of debt. Avoid new loans, stick to a budget, and tackle your credit cards. A cheap used car is the way to go for now.