23 yrs, 106k contract salary, living w/parents, 150K+ student loan, $322 recurring monthly expenses ($150 for the S&P 500), 740-700 FICO (new card).
Hello, above is a synopsis into my current situation and as of rn it's not bad. I'm looking to make one of my first financial moves with buying a used car ('17 Toyota, <40K miles) shooting for $14K dollars. I asked my parents about this and they are fully supportive but we have a complete disagreement about how to go about financing it.
I'm on the pay-in-full side, because the entrepreneur in me despises monthly payments. They are on the build-credit-early side because having a good credit score is important for buying a house and getting good interest on a loan.
My argument is that monthly payments are silly because they eat into your monthly income, even if you do a large down-payment then 24 month payment cycle dropping $200 a month you still pay more in the final break down. Plus that $200 dollars should be saved for repairs/maintenance done on a 6-8 month rotation.
Their argument is to build credit early by having a car payment, because credit is everything in America and will determine how the banks asses me for lending options. And that having 3-5 credit cards is best because of the line of credit and with a car loan. One of my parents worked as a mortgage loan officer with some rich clients and saw plenty of wealthy people have poor credit.
My rebuttal is that no twenty-something year old is buying a home for many years to come and that recurring payments on an instantly depreciated asset is paying more for something that I'll replace within 3-5 years. The money is better kept in the market and paying off student loans.
So what is the play here?
And should I be tripping over myself to make lender's happy with a FICO score or is there a more sensible approach than constantly opening and closing credit cards? which seems implicitly predatory to me IMO.
original posted by InternationalRub4302 to r/personalfinance on Wed, 28 Feb 2024 19:11:27 GMT.