What you need to remember is that the question isn’t “will you be able to finance a car” but “AT WHAT COST will you be able to finance a car.” Even people with horrible credit usually can find someone to finance them, but they will pay through the nose in higher prices, higher interest rates, requirements of credit insurance, added fees, etc. I’ve seen finance agreements that effectively nearly triple the cost of the car, although you can’t tell that until you do the math, which those buyers didn’t know how to do.

If one year of history on a low credit limit card is all the credit history you have, you would do well to save up enough for a hefty down payment, which should help you negotiate better terms.

On the other hand, car dealers seem pretty desperate to sell inventory right now, so who knows what they’ll do?

Just something to ponder:

A friend of ours was looking into one of those 0% financing deals on cars. What he found out was that 0% is not really 0%. There was a “Cash” price, and then a 0% financing price. They effectively increased the price of the car in order to cover the financing. When my friend questioned them about it, they basically said “why would we give someone financing for the same price as someone who walks in with cash”? An uneducated consumer might just walk in and take the 0% deal without asking if there was a cash price, thinking they were getting a great deal.

I also second the notion of buying a new Honda! I know you drive a Honda now so you know how great they are – Between my Husband and I we’re on our fourth Honda (an Odyssey, because we couldn’t fit 3 car seats in our Civic!). We did buy the Odyssey used because it was half the price of a new one, but I wouldn’t hesitate to buy a new Honda in the future. They hold onto their resale value remarkably well, and we have NEVER had a major repair on any of our Hondas. I *heart* Honda. lol.

You might try that, or see if one of the credit reporting services or MyFico allows you to do something similar.

I really don’t think it’s your lack of a car loan. I haven’t had a car loan since 1985, and my score has been excellent for as long as I remember. My guess it it is just the length of your credit history compared to your husband’s, or perhaps the ratio of debt to available credit.

Credit history is not only the length of time they have data for you, but also the age of your accounts and their credit limits. I learned that the hard way when I canceled a credit card I’d had for about 20 years because I wasn’t using it anymore. Although I’d never requested a credit limit increase, the issuer gradually had increased the limit to over $35,000. When I closed the account, my credit score took a significant hit.

On the one hand, when the time comes to buy a car, there may be zero interest options available in which case, why not? But on the other hand, paying interest on any debt just to increase your credit score seems like a move in the wrong direction to me.

Just a thought.

April – If my credit score were already excellent, I wouldn’t be considering it. My husband’s is considered excellent, but mine is just good, not excellent. And we would still only buy a car that we could pay for with cash we had saved – we would just finance it instead of shelling out the cash upfront. My concern is that once the car loan falls off of my husband’s credit, his might drop as well.

Carrie – we thought about that. We’re not sure how long you have to be making payments for in order for it to have an effect on the credit rating. We would be willing to spread our payments out over 6 – 12 months, but not much longer than that. And again, we’d only do it if we had cash in the bank to cover the whole thing from the start.

Kaytee, – my husband is 32, and I’m 30. I think he got his first credit card a year or two before I got mine, and that could be a factor for him. When we looked at our reports side-by-side, the biggest difference we notice is the car loan. And books I’ve read about FICO scores indicate that car loans are definitely a factor in credit scores.

It’s frustrating that credit scoring is such a secret operation. I’ve read a lot about them, but it’s still just speculation (educated speculation, but speculation none the less) on the part of the author. We’ve got lots of time to think about this, and we won’t be using a car loan as a means to buy more car than we can afford. We’re just trying to figure out if it would be beneficial to us in the long run. We figure that having a great credit score in our corner is a benefit, even if we don’t have concrete plans to use it or get a loan anytime soon. But we’re not sure how much of an impact a car loan would have anyway. We’ll be watching my husband’s score later this year to see how it’s impacted when the car loan falls off of his credit. That will give us more of an idea about how all of this would work.