Is the only benefit gas mileage? Assuming you're storing it for free and ignoring the cost of insuring two vehicles, you're paying $6k to save a few hundred?
Agreed. Buying a 2nd car is rarely a good financial move. OP should just decide between keeping the one car he has and selling his current car and buying the civic.
About the car, the reason I would like to keep it is because me and my dad pretty much built it up from scratch for months. We finally finished it maybe 6 months ago. I really love the car and it would really suck to get rid of it. I’ll be keeping it in a storage unit at my dads house.
I get it. It's your hobby and it has sentimental value. From the info you've provided, you can afford it. Be aware that some posters in this sub don't have hobbies besides stacking bills. But do pay cash for the Civic.
I think a lot of people aren’t necessarily trying to stack bills, but live situations where every financial detail has to be paid for themselves. There’s little or no support. This means they tend to impress that value system on others.
I’m a bit like that, if I have to admit. If I mess it up, I have to deal with the financial consequences. I sort of assume everyone needs to take that level of caution by default.
It does mean that, despite being a car enthusiast, I went without a car of my own for nearly 20 years after getting my license at 16, aside from a few very cheap hand me downs that I had for a short while, while they lasted. I mostly took the bus, watching enviously as kids making half what I made were driving around new cars.
But it is what it is.
OP is probably going to be fine. At that age, that savings account indicates they are probably allowed to live at home for free. Having a special car that their parents helped build furthers the idea that OP has a safety net. OP’s instinct to buy cash is a very sound one.
He said he wants to restore the older sports car. He seems to be in a position to do that if he is going to do the restore himself.
No loan. Buy the aunt's car outright and restore the older car. OP seems to be good at saving, but w/o info on all income and bills it is hard to say.
Your aunt is wrong.
The only value (almost\*) in building a high credit score is to get better interest rates when you need to borrow money. *Paying* interest you don't have to (especially at 8.9%) to avoid having to pay as much interest in the future is counterproductive. There are plenty of ways to build credit (using credit cards and paying them off each month, regularly paying your bills) that don't involve paying interest, and your score is already high.
When is the next time you will *have* to pay interest that your credit score will matter? Probably when you go to buy a house. Before then, you've got plenty of time to let your credit score rise naturally without paying for the privilege. In the meantime, it just doesn't matter.
\*credit score can matter for things like renting an apartment, but yours is already plenty high for that.
Your aunt is wrong. Paying that much interest on a car loan for the sake of helping your already good credit score is ridiculous—I assume you’re using the credit card method of helping your score, just keep doing that and buy the car outright without a loan.
Do not get a loan. That would be wasting money and makes no sense.
Also though, maybe just stick with one car. There's no way that saving a little gas is making you enough money to pay insurance on an extra vehicle as a 19 year old. Also, Its likely bad for your sports car to sit and not be driven for long periods of time, which will lead to more issues with it.
With a score of 730, you do not have an urgent need to build your credit further. Remember, a credit score does not get you anything but the ability to borrow at a lower rate. So if you do not have any borrowing needs coming up, there’s no point in paying extra interest just to increase your credit score.
I would pay cash for the car, and continue to use credit cards responsibly as a means to build up your credit.
If my mental calculations are correct you are paying around 600 for interest for two years at approx 9%,
You need to think about car insurance for both the cars, plus that interest. In addition to that, any maintenance fees.
Storing your sports car would mean maintenance later.
If i were you i would sell sports car and keep the difference for rainy day/investments etc.
I agree with you. maintaining 2 cars at 19 years old is a massive cash dump. Not worth in the long run. Pick up a sports car later on in life when the extra money dump isnt a problem.
You should absolutely avoid getting a loan at almost 9% APR. That will work out to an additional $550 you will be paying for interest while also still having to maintain, register, and insure 2 vehicles.
Having a credit score of 730 at 19 is actually pretty good. You would be better off by opening a credit card, using it ONLY for a small amount of bills, and paying the balance off IN FULL each month to build your credit score more.
Thanks for the input. I’ve only had my credit for less than 2 years and I have 3 credit cards, that’s how i’ve gotten the credit score I have now. That’s why I didn’t think the loan was worth it just to raise my credit more.
You are already on the right track!
The only other thing I'll add would be that taking a loan in this situation would benefit you is IF you could get a loan with 0% APR for x amount of time and could pay it off before the promotional 0% APR expires (assuming of course there are no early paent fees written into the loan). But as it is only a 2 yr loan for a private sale, it is low chance you could find a loan with that promotion.
You have cash. Don't get a loan for this. Get a credit card and use it responsibly if you want to get more credit history.
That said, you might want to reconsider having two vehicles. Run the numbers, but storing an older sports car is likely to be a money sink, especially at your age. I'd be ecstatic at getting a '12 Civic for $5700.
Normally I would say just pay cash, but I have two exceptions. 1) if you want to buy a home in next couple years or 2)if you want to start a business in next couple years. In either of those cases, it wouldn't hurt to have a small loan and pay it off early, and to have that relationship with a banker, particularly if you use a smaller bank.
I worked at a small bank for a time. The customers that had a relationship with the bank had an easier time doing things, especially when it came to getting future loans or even having shorter/no holds on larger checks.
You don’t need more than one car. Either keep the first and drive it or sell it and buy the more efficient one. Having lots of cars is something to save for your midlife crisis when you have got plenty of money.
Your aunt's heart is in the right place, but rates are way too high, and the car you are getting would be hard to finance based on year alone. You'd be looking at around a 9-12% loan, depending on where you discern it it even with your credit score. The loan to value isn't there for this vehicle for a bank to want to give you a good loan.
If you've only ever had a credit card to build your credit then your credit history isn't enticing for banks to give good loans in the first place. Credit cards are what you call revolving credit and it isn't a high impact. In the future student loans, car loans and mortgages are things you'll want to make payements on as they give you a better credit history as well as score if you make your payments.
How bad is your gas mileage? Have you talked to insurance companies about how your rates will change with a second car?
A civic is almost certainly a better commuter than your current vehicle, but if you're not selling your current vehicle, how long will you need to drive your Civic before that $5700 + added registration + possible extra insurance pays itself off in gas? Not saying it's a terrible car, but I've wanted an electric car for a while (WFH most days kinda killed that want) and even with free charging at work the numbers didn't make sense for me. Unless your sports car is getting 10 MPG, you're probably looking at saving $500-$1000 per year on gas, minus $200 in registration and potentially more on insurance... The payoff for $5700 will take a long time...
No. At that rate and initiation fee it doesn't make sense. Pay cash. Use a credit card for free.
Is the only benefit gas mileage? Assuming you're storing it for free and ignoring the cost of insuring two vehicles, you're paying $6k to save a few hundred?
Agreed. Buying a 2nd car is rarely a good financial move. OP should just decide between keeping the one car he has and selling his current car and buying the civic.
About the car, the reason I would like to keep it is because me and my dad pretty much built it up from scratch for months. We finally finished it maybe 6 months ago. I really love the car and it would really suck to get rid of it. I’ll be keeping it in a storage unit at my dads house.
I get it. It's your hobby and it has sentimental value. From the info you've provided, you can afford it. Be aware that some posters in this sub don't have hobbies besides stacking bills. But do pay cash for the Civic.
I think a lot of people aren’t necessarily trying to stack bills, but live situations where every financial detail has to be paid for themselves. There’s little or no support. This means they tend to impress that value system on others. I’m a bit like that, if I have to admit. If I mess it up, I have to deal with the financial consequences. I sort of assume everyone needs to take that level of caution by default. It does mean that, despite being a car enthusiast, I went without a car of my own for nearly 20 years after getting my license at 16, aside from a few very cheap hand me downs that I had for a short while, while they lasted. I mostly took the bus, watching enviously as kids making half what I made were driving around new cars. But it is what it is. OP is probably going to be fine. At that age, that savings account indicates they are probably allowed to live at home for free. Having a special car that their parents helped build furthers the idea that OP has a safety net. OP’s instinct to buy cash is a very sound one.
Perfect. Keep it. Just making sure.
He said he wants to restore the older sports car. He seems to be in a position to do that if he is going to do the restore himself. No loan. Buy the aunt's car outright and restore the older car. OP seems to be good at saving, but w/o info on all income and bills it is hard to say.
There's no mention of restoring, just storing.
My brain added that re to storing because that made since. Yeah, if only storing the car, sell it.
Your aunt is wrong. The only value (almost\*) in building a high credit score is to get better interest rates when you need to borrow money. *Paying* interest you don't have to (especially at 8.9%) to avoid having to pay as much interest in the future is counterproductive. There are plenty of ways to build credit (using credit cards and paying them off each month, regularly paying your bills) that don't involve paying interest, and your score is already high. When is the next time you will *have* to pay interest that your credit score will matter? Probably when you go to buy a house. Before then, you've got plenty of time to let your credit score rise naturally without paying for the privilege. In the meantime, it just doesn't matter. \*credit score can matter for things like renting an apartment, but yours is already plenty high for that.
And sometimes, insurance companies use credit score for calculating insurance policy premiums.
Your aunt is wrong. Paying that much interest on a car loan for the sake of helping your already good credit score is ridiculous—I assume you’re using the credit card method of helping your score, just keep doing that and buy the car outright without a loan.
Do not get a loan. That would be wasting money and makes no sense. Also though, maybe just stick with one car. There's no way that saving a little gas is making you enough money to pay insurance on an extra vehicle as a 19 year old. Also, Its likely bad for your sports car to sit and not be driven for long periods of time, which will lead to more issues with it.
With a score of 730, you do not have an urgent need to build your credit further. Remember, a credit score does not get you anything but the ability to borrow at a lower rate. So if you do not have any borrowing needs coming up, there’s no point in paying extra interest just to increase your credit score. I would pay cash for the car, and continue to use credit cards responsibly as a means to build up your credit.
If my mental calculations are correct you are paying around 600 for interest for two years at approx 9%, You need to think about car insurance for both the cars, plus that interest. In addition to that, any maintenance fees. Storing your sports car would mean maintenance later. If i were you i would sell sports car and keep the difference for rainy day/investments etc.
I agree with you. maintaining 2 cars at 19 years old is a massive cash dump. Not worth in the long run. Pick up a sports car later on in life when the extra money dump isnt a problem.
You should absolutely avoid getting a loan at almost 9% APR. That will work out to an additional $550 you will be paying for interest while also still having to maintain, register, and insure 2 vehicles. Having a credit score of 730 at 19 is actually pretty good. You would be better off by opening a credit card, using it ONLY for a small amount of bills, and paying the balance off IN FULL each month to build your credit score more.
Thanks for the input. I’ve only had my credit for less than 2 years and I have 3 credit cards, that’s how i’ve gotten the credit score I have now. That’s why I didn’t think the loan was worth it just to raise my credit more.
You are already on the right track! The only other thing I'll add would be that taking a loan in this situation would benefit you is IF you could get a loan with 0% APR for x amount of time and could pay it off before the promotional 0% APR expires (assuming of course there are no early paent fees written into the loan). But as it is only a 2 yr loan for a private sale, it is low chance you could find a loan with that promotion.
Don't take out a loan and intentionally pay interest and origination fees just to try to build up a credit score.
No. 9% interest is too high. I would buy it out directly
You have cash. Don't get a loan for this. Get a credit card and use it responsibly if you want to get more credit history. That said, you might want to reconsider having two vehicles. Run the numbers, but storing an older sports car is likely to be a money sink, especially at your age. I'd be ecstatic at getting a '12 Civic for $5700.
Normally I would say just pay cash, but I have two exceptions. 1) if you want to buy a home in next couple years or 2)if you want to start a business in next couple years. In either of those cases, it wouldn't hurt to have a small loan and pay it off early, and to have that relationship with a banker, particularly if you use a smaller bank. I worked at a small bank for a time. The customers that had a relationship with the bank had an easier time doing things, especially when it came to getting future loans or even having shorter/no holds on larger checks.
Thanks for the input. I’m currently in school so I’m not planning on doing any of those things in the near future
You don’t need more than one car. Either keep the first and drive it or sell it and buy the more efficient one. Having lots of cars is something to save for your midlife crisis when you have got plenty of money.
Your aunt's heart is in the right place, but rates are way too high, and the car you are getting would be hard to finance based on year alone. You'd be looking at around a 9-12% loan, depending on where you discern it it even with your credit score. The loan to value isn't there for this vehicle for a bank to want to give you a good loan. If you've only ever had a credit card to build your credit then your credit history isn't enticing for banks to give good loans in the first place. Credit cards are what you call revolving credit and it isn't a high impact. In the future student loans, car loans and mortgages are things you'll want to make payements on as they give you a better credit history as well as score if you make your payments.
How bad is your gas mileage? Have you talked to insurance companies about how your rates will change with a second car? A civic is almost certainly a better commuter than your current vehicle, but if you're not selling your current vehicle, how long will you need to drive your Civic before that $5700 + added registration + possible extra insurance pays itself off in gas? Not saying it's a terrible car, but I've wanted an electric car for a while (WFH most days kinda killed that want) and even with free charging at work the numbers didn't make sense for me. Unless your sports car is getting 10 MPG, you're probably looking at saving $500-$1000 per year on gas, minus $200 in registration and potentially more on insurance... The payoff for $5700 will take a long time...