Overhaulin'

I just paid off my car today -- Kelly Blue Book value is $8,000. If I sell my car for cash....?

could I pay off old debts, and some current ones, which total about 6 grand. I have bad credit....550; but mostly from old accounts. I have had 3 30 day late payments in the last year. I make a good living and know that a relatively small amount of money is holding me back. If i sell my car and pay off my debt, will my credit score improve greatly overnight??? In my theory, I would get a new car asap ( I obviously need one!) with a great rate, and be in a great position credit wise? Is this even an option or just crazy?? Thanks so much for anyone who can help me out. thanks for answers so far....I thought it was crazy, but just making sure. I totally plan on paying down debt, getting a tuneup for my car, and hoping it lasts for years!

Public Comments

1. Crazy. You have a paid off car. Be happy with it. Take the money that was going to car payments and pay down your debt.
2. No, your credit will not greatly improve overnight. Repairing credit is a long, slow process. You just paid off a car and you want to dump it right away to go back into debt on a new car? That is not wise.
3. It's a cool idea. But it is fair to expect a bumpy road (but not necessarily a long road). If you implement the change per the plan it will take a couple of months to see the increase. Even then the bad items change to say 'paid.' But they may still say 60 or 90 days late. Another trick towards the goal of bettering the ole credit score is the line by line analysis. You obviously have your report. be sure and get all 3. be sure and contest everything that you possibly can. Be sure and request that those you pay take the time and trouble to contact the credit bureau they use on your behalf. And always remember that a third of your score is based upon available credit. You could get more credit--and hopefully not use it. Just sit on it. That increase may be the difference in getting that car you want and at the rate you need to get. Try a credit union. The dealerships are not walys the best source of loans.
4. I agree with the posters who told you to hold onto your car. Take the money that you would have used to make your car payments and use it to pay down your other debts. Remember, just because the Blue Book value is $8,000, it doesn't mean you'll actually get that much. In fact, if you take your car to a dealer and ask for a trade-in, you're likely to get much less than that, because it's going to cost the dealer money to get the car ready for re-sale.
5. Keep the car it is paid for (drive it until you have used all the miles you can get out of it as a car is the worst personal investment) and pay down the debts. Pay at least the amount of your former car payment to pay down debt. Concentrate on your credit cards first and knock the balances down one by one. Your credit score will not change overnight and at 550 an auto loan will have a very high interest rate that will get you right back into debt. Get debt free, stop using the credit cards, cut out eating out and close credit card accounts you are not using. This will bump up your credit rating over the next few months.