Overhaulin'

If I have the $ to buy a car with cash, but would it build my credit if I use a credit card & pay it off asap?

I am just trying to decide the best way to pay for a new car. If I can buy the whole thing on a credit card and pay it off immediately, would this be the better choice than paying the full amount with cash (will it build my credit to pay with a credit card versus paying with cash)? If the car costs more than my credit limit, will dealerships let me pay the remaining balance in cash?

Public Comments

1. It will hurt your credit as you will be using too high a proportion of your available credit limit. Better to get a one year laon from the bank. Better still to pay cash and get a big discount from the dealer.
2. That would be silly. Right now most dealerships are offering very low APR. Get a loan for it and pay it off with a few monthly payments, then you'll have a loan paid in full on your credit history. You should never ever pay cash if you can get financing for a rate less than what you'd earn on a savings account or CD. So if you can get APR under 3%, then put that money in CD earning 4%. Right now Toyota, Nissan, GM, and BMW are all offering below 3% if you're a qualified borrower. You'll end up ahead instead of throwing all your money into something that declines in value every year. Using credit is not a good idea since the more you use, the lower your score is because of the available credit (credit limit to credit balances makes up about 30% of your overall credit score).
3. If you have more than enough to cover the total price of the car it would be a good idea. You don't want to get to close to the total credit limit either. Put the cash aside so you don't spend it and when your bill comes make two or three times the minimum payment. What really helps in a credit history report is to have current open accounts that you have been paying on time. The assumption of some people that buying everything credit and paying cash as soon as the bill comes is a miss conception. What creditors want to see is that you are capable or managing your payments on time not only for a couple of months but for a long period of time. I hope it helps.
4. There are several options,using a credit card is not one of them. Shop around for loans,even through the dealers. You can even put the money in a savings account and Borrow it from yourself. You get a bank loan and put the savings up as collateral. You can then make payments to the bank and have some of the payment deposited into your savings account. All methods will help your credit as long as you make the payments on time or pay the loan off anytime.
5. I would not help you to put it on a credit card it will hurt you. If you pay cash it will be one less stress but, credit wise this will not help either. I just car a car and found out how important having a car loan is, most banks don't give car loans to first time car buyer (silly I think). It will be very helpful to your credit to get a car loan and make a few payments on it so it shows on your credit then pay it off.
6. It would not be a good idea to put your vehicle purchase on a credit card. I don't think you can - other than a percentage legally. Even if you could, you would be much better off if trying to build your credit to finance through a bank (dealerships shop for best rates for consumer). Even if you finance half and make your payments on time, you are bettering yourself in the world of credit - as long as you know you can make payments on time for the term of the loan.
7. buying with a credit acrd and paying it off right away or even in less than 12 months will not help your credit rating at all - they want to see tou make regular monthly payments on time - paying it all off right away - it won;t even show up on your credit history
8. Maxing the credit card to buy a car then paying it in full really won't help your score any more than charging a small item and paying it in full. Nor will it help to string out payments for a year. You get the payment history but you also pay interest. Carrying balances of more than 30% of your available limit, hurts your score. The best way to use your credit card to build your credit is to use it every month and pay it in full. This builds a good payment history. It isn't the amount; it's the payments. If you take out an actual car loan, you need to pay on it at least 12 to 18 months to improve your score -- installment loans are a different category. The interest rate for a car loan is probably higher than what you can make on the cash in a savings account. Just pay cash for the car. Save the interest.