What is the best way to finance a car? (options given?)?

Question

Okay so I'm an 18 going on to 19 this July. I have decent credit I think, I paid most of my bills on time (electricity, power, etc) and I use a credit card now with a student limit of 500$ but pay everything and all the amounts on time before they are due.

Okay so I'm starting a job (min wage, but still, it's a job) like in July and plan to continue with it hopefully until....at least December. I asked for an undergrad loan from Citi and they gave me one with 4.5% interest, which I think is very good and decent for a student, with at least a year to pay it back. It was for 10,000 dollars. I'm not sure how often they'll be giving me the money & the details because I haven't signed it but that's the first detail I wanted to mention. Secondly, all I want is a Ford Escape, preferably a hybrid (I always wanted a hybrid, even before the gas crisis), but it seems that even used cars are selling for 20k if I'm lucky. So ...

Should I go to a dealer when I start my job and opt for a new car and do monthly payments? Will they allow someone so young to do that?

Secondly, if the above option is a no, then can I take the 10k I will get from Citi and invest it in a car? Even a used car will be okay with me, just really really need my own car.

Thanks for any help and insights I didn't see.

Answer 1

your loan from Citi is really good. But keep in mind that if you have to pay it back in a year, your min wage job is not going to cut it. Also, unless your job is as a courier or delivery person, there is no such thing as "investing" in a car

Yes, a dealership will get you in a car. The question is the terms. Most likely, you'll be hit with a 15% APR minimum.  Again, most people making 2x min wage have a hard time keeping up with that bill.

My suggestion is this:

Start your job, and when you get your first 2 paychecks, do a budget that calculates your earnings and expenses. Be sure to include how much you would need to entertainment (movies, going out with friends, etc).  Then, you should be able to determine how much you can afford on a car.  

One thing you didn't mention is if you have any savings.  If not, then savings should be a part of your budget.

Now, chances are, you can't really afford a car payment so if you can't take the time to save money to buy a car, take no more than $1000 from your citi loan and find a car through the paper or at a lot and pay cash.

Again, no more than 1000 total

And yes, it would be an old cheap car. But, for about $50 you can get a mechanic to check it out for you and let you know if it's worth it.

Answer 2

not specific enough...sorry

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