I am young and just establishing credit. I have awesome credit, just not a long history of it. I do have a full time job that I have been at for a year (I'm earning my degree part time), I rent, and I have two credit cards that I pay off in full each month.

My issue is, I need a new car. Badly. The car that I have is about to die, and the repairs on it will cost more than it is worth. I cannot get a new car (I love the Fit) because I cannot get a cosigner. So I decided that I was going to get a really good used car, for under $6000 and pay it off in 24 months and that it would help me build credit. So far that solution was working out great.

But now, as I'm looking at cars, since they are used and for around $6,000, it's nearly impossible to get anything financed. I found one car that I LOVE. It's the Honda Civic Ex. But it was a 2001, and it couldn't be financed because of its age. (I'm quite devastated, because I want a car that looks like the fit, but feels and drives like the Civic ex)

So my question is, how do I find a good car within a good year and decent price range? I know that I will need a cosigner if it is anything over 5-6,000.00 and I cannot get one. But I don't want another junk car that I will be making payments on to have. And I want to stick with Honda. I'm trying to find a good Honda, decent mileage and year, that won't give me issues and good mpg that I will like.

Does this sound realistic? Has anyone been in my situation? How did you tackle it?

 

For that price range, you will probably not be able to find anything that isn't so old that lenders would finance. I would either save up like 2 to 4K and by an older Civic or try to get a loan that isn't an auto loan like a personal loan. The latter would have a high rate most likely and since your credit history is short might be hard to get. You could find some serious deals on craigslist on a used Civic with low "Honda" miles like 90K.

 

Is the problem you're facing due to the fact that you can't put a nice sum in advance down on the car, to reduce the loan, thus everyone wants you to have a cosigner?

If that's the situation, then your best best is to buy a cheap junker that's hopefully reliable... it may not be a Honda or a very nice car, you're just looking for something that can hold it together. Then save up so you can put money towards another car down the road, so that when you get the loan, you can buy more car with less financing.

Its a bit brutal getting the credit history started, but that's how it will have to be gamed.

 

I bought a 10-year old Honda Accord EX (1998) 5-speed from the original owner. The 151k miles scared some people, but if it's been well-maintaned and respected, you can tell. That car was so quiet idling I couldn't tell it was running. It had already had the clutch replaced, and I only had to replace the front brakes and one wheel bearing before it got killed by a deer a couple years later. $3700 for a brilliant, reliable, good-looking car. I've done better, too. Find a Honda that's had one or two owners, has been well-kept, and generally you can tell with an overall glance and test drive how a car has been treated. Trust your gut (if you have some experience with cars - otherwise trust a friend's gut!), and you can get a great car for very little dough. I've bought 1-owner Japanese compact sedans in great shape for under $1000. You just have to keep your eyes peeled. $1500 is perfectly doable, and $2000 will get you a peach!

Good luck.

 

Try leasing a car from Honda, If you owe money on a car it can be rolled in it and when the lease is over you can get financing from Honda at a lower rate. Lease has low payments and except for the down payment it rolls over to your next lease if you chose or you can buy the car at a cheaper cost at the end too. The sticker on my car was 18000 and after 3 years the car is 11000 if I keep it. That car would go on the lot for 16000+ after 3 years of use if I give it back.

 

Depends on how much you can afford each month. I paid around $10k for my 07 fit about a year and a half ago. My payment is $200/ month and it only had 70k miles when i bought it. Just gotta find a good deal and if this is your first financed car ever you may get raked over the coals a bit at first. It will be worth it though because your credit will be immaculate if you make your payments on time time and after about 6 months to a year you can refinance the loan. Just my opinion.

 

Lease is a good option, A used car will have high interest and then the problems of maintaining it. Honda has a great lease program and is worth looking in to. The payments are usually around 200 and you just have oil changes. You still have to take care of it, its not a beater and your limited on mileage but they usually take the car back as a used car. The better shape its in the less money you have to give back to restore it if you go over the mileage.

 

Its good that you pay off your credit cards every month but when you pay them off in full you don't really build any credit, you should pay it off after 2 monthes. I was told this is better than paying it off in full every month.

I agree with SG, take your money to the dealership and lease something, Honda is awesome to deal with, trust me! This way you get a very reliable car that's going to be covered completely while your driving it too.

 

I don't know that ever running up any credit card debt would be good for your score. The credit reports show a balance owed because even if you pay it off every month there are new charges by the time the bill prints, and they don't necessarily report the outstanding balance on the date a payment is made.

 

Leasing is pretty hard to get actually. You usually have to put a decent amount down and you have to have pretty good credit. I had a 700 credit score and couldn't get a lease without a big down payment and then I decided to buy instead and got 3.9% through Honda Financial without a problem.

 

I can tell you that this is absolutely false. By no means should you pay on interest, and I can guarantee it won't raise your score.

Creditors look at is utilized balance, you just don't want to be carring a balance of 50% of your credit limit.