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Penguin_Doctor t1_je6xyx0 wrote

Depends on the interest rate of the debt and the price and rate of the car as well. Hard to offer a solution with no insight on your complete financial situation as well.

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AreYouEvenWhite OP t1_je71oub wrote

APR is 20% on a credit card. I have $3868 owed. At the beginning of the year, I had $5500. I was at 410 CS after my fallout, now at 520. The cars I looked at were around 5-7k in price. The rate range was 10-15%. Perhaps waiting for 600+ cs would be more beneficial for me? Soon, my CS will go up again significantly since consecutive payments and knockout of a collection.

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Penguin_Doctor t1_je7270m wrote

I would get rid of the cc debt asap. 20% is a whole lot worse than 10-15% (which is also absurd). Stay at your current job as long as you can and save up for the car you want. In that time, hopefully your credit score will be much higher as well and you can get a better rate. Assuming you won't buy a new car outright and will be financing regardless.

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AreYouEvenWhite OP t1_je73vor wrote

That sounds like a solid plan. I'm taking 10% of the amount I'm put down for car savings. I'll still have money in my checking, but it's for living situations. It really is absurd. After paying 80% of my balance, should I ask for a lower apr with creditor? I'm hoping as well, I did a calculator within my credit company to get an estimate when it was going up. It was close with estimation but higher than the estimate. I'll do another and see what outcomes I get from paying that much. Thanks for your help!

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Penguin_Doctor t1_je74xuw wrote

It'll probably serve you better to just pay over the minimum payment on the cc debt until it's entirely gone before going into more debt. I personally would avoid even going back into debt for a depreciating asset like a car unless absolutely necessary. Showing creditors you can handle debt responsibly is going to have a great effect on your credit score. Continuing to carry a balance and just restructuring your debt won't help you as much as just grinding out that payment while you're in a position to do so will.

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AreYouEvenWhite OP t1_je7czlb wrote

That's what I've been doing. The minimum is $130. I either do $200-400 biweekly. I've only previously done minimum for most of my life, falling in a loop. I picked up books, reading online to make changes to my day to day life to make these improvements. Depression also kept me from caring. Battled that for decades and won on my own last year in Oct 2022. Feb of 2023, I found myself no longer depressed. I see that's very interesting. Once I get there on lower credit limit. I will keep it low if I go over, I will pay it quickly.

Actually, I have a question for you once more. Since my limit is $5000. The car I'm getting is 6k. I have 3.5-4k saved up. Use some of my credit or get a loan? I'm not going this route unless it could be beneficial to my credit report with quick hefty payments.

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Penguin_Doctor t1_je7dk8g wrote

Are you saying your credit limit is $5000? To maintain a good credit score, your credit utilization should always be under 30%. This will improve your score. Anything higher will start to be detrimental. It's generally favorable to put as much down as you can. Not only for better rates, but lower minimum payments. Of course it depends on many factors.

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AreYouEvenWhite OP t1_je7dz1f wrote

Gotcha, I'll keep that in mind. Thanks for your help! Im use everything I learned here and work on that credit with focusing on the car later. Have a good one.

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Penguin_Doctor t1_je7ealy wrote

Absolutely. Also, do your own research as well. A random guy on reddit may not give the best financial advice. I was in your situation not too long ago, even similar debt amounts, and now I'm doing better than I ever have been. Goodluck!

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AreYouEvenWhite OP t1_je7hen6 wrote

Research has always been my life. Though, hearing others, especially reddit, has always been a big contribution to the knowledge I might've skipped.

I did some subtracting on my debt. Where I'm at now. When I drop $2000. I'll be $300 away from 30%. Next Friday will put me in the safe zone.

I'm glad you're doing better off! Keep it up on your end. We both got this. Believe it or not. I used to be 750+ score. That was years ago.

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