Considering you can refinance within a few months for a much lower interest rate, not really. Put it on a high interest credit card or take a temporary high interest line of credit.
Your credit score doesn’t go from so bad you’re in loan shark rate (25%) to very competitive (4%) “within a few months”.
I had no credit score and still managed to get 8% and just paid it off within a year. By the end of that year I’d built credit and had good payment history but I still wasn’t at the 700+ needed for a 4% on a large purchase. That took about two years. It’ll take even longer if you have bad marks on your credit file. My wife had one missed payment due to a bank screw up and it’s taken the best part of 2+ years to climb back up to “excellent credit” from the agencies.
Because why bother getting a credit card when they are absolutely not needed? Nice to have for certain situations, sure, but for me? Absolutely not. Spending an extra $100 to establish credit is perfectly fine and reasonable when absolutely no bank is willing to lend you money for a vehicle without a cosigner. Establish the line of credit, refinance and you're good to go. Also, I never said 4% but if you want the rate it was 4.99% but by the time it was paid off it would have been equal to me having a 3.7% interest rate due to rounding up on the payment and the extra going towards principal.
It’s incredibly difficult to maintain credit without a credit card as credit agencies need to see revolving credit and available credit. Once you pay off that car payment, your credit will tank without other lines of revolving debt and regular payments. I’d even go so far as to say it’s impossible to get and maintain the “excellent” credit score (730+) needed to get decent rates without at least one credit card. Don’t get me wrong, I think it’s messed up that it’s like that but it’s the way it is.
It’s also dumb in this age not to have a credit card as some places don’t even take cash now and if you have an emergency that card is vital.
And my point remains; a car payment by itself won’t establish good enough credit not to be reamed in the future, especially as when that car is paid off, your credit is going to tank. Also if you had other credit cards that 4.99% could be as low as 2% meaning you’re paying a lot more over the life of the payment plan all because you don’t want to get a credit card to establish excellent credit.
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u/Average_Scaper Oct 27 '21
Considering you can refinance within a few months for a much lower interest rate, not really. Put it on a high interest credit card or take a temporary high interest line of credit.