Should I finance a car and then pay off the balance in full for the first payment?

Question

I have enough cash to do this and I'm thinking it would benefit my credit history.

Answer 1

That is a really stupid idea.  If you have the money to pay cash then pay cash.  The inquiry on your credit report to qualify you for the loan will be a bigger hit against your credit history than the early payoff will be a benefit to the credit report.

Plus you'll end up paying interest on the loan and that will cause you to pay more for the car.

Bad idea.

Answer 2

It depends on the type of financing.  In many cases, the agreement does not amortize the interest like a mortgage, but loads the interest into the first payments, so you might not come out dollar wise.

I would discuss the types of financing available with your bank and ask them this very question.

The prompt payment may benefit your credit.

Answer 3

It takes 6 months of activity to hit your credit report.

Answer 4

It will cost you a little in interest, but make the payments in 2 months, this will show a reaccuring payment history.  What I would do is most of what you are paying for the car, everything but like $3,000.00 then you will have a very little interst charges.