I need advice, should I buy a car?

[Anonymous]

In my situation, I’m an 18 year old college student who has scholarships to cover all costs of attendance, meaning I have no credit. I’ve maintained high grades while working and earning about $600 a month. My food is Pre payed with a meal plan. I need to have a reliable car since I live 5 hours away from home. My parents pay for my insurance (a total blessing). Recently I found out my car will be totaled due to an accident where I got rear ended. My car is drivable but can have many unexpected costs. I have invested $5,300 into this car since the middle my Jr year of high school, I am now a college freshman. In exchange for my car the insurance company is willing to give me $4800. This would make a substantial down payment on a deal I have lined up for a Kia Forte at $17,000. I have the ability to either get rid of my car and take the whole $4,800 to put towards a new car to start building my credit since I have no student loans or credit cards, or keep my old car for $1,000 and take my car and the $3,800 to a repair shop, pay whatever to fix it and keep the difference to pay for future repairs. I also want to take my parents paying for the new cars insurance into account. Thank you for any advice <3

Side note: My mom would be co-signing on the car but I would be making all the payments.
Building credit is important to me so I can have total financial independence when I get out of college.

Keep your car and keep the difference for future repairs

Take the money and buy a new car so you can start to build credit

[zeitgeist057]

I would take the money, but I would not buy a new car with the idea of building credit. The reason being, you don’t have any extra money to waste, and buying that car on credit is going to cost you roughly twice as much as paying cash for the car. Is that Kia forte really worth $30,000? Probably not. So, in order to accomplish the goals that you’ve said that you want to accomplish this is what I would do:

Take $500 of the money that you get disbursed by the insurance company and put it into a secured line of credit with the credit card company or bank such as Bank of America who will issue a secured Visa credit card in your name with a $500 as a security deposit should you default on payments. You should not carry a balance, but you should pay your balance in full at the end of every month. This card should also have no annual fee. If you have no annual fee, and you pay your balance in full every month, having a credit card will not cost you a single penny, and it will build good credit.

With the remaining $4000 or so, I would look for a good used car in the 3000 or so range. For this you’ll probably be looking at something like 2003-2008 cars with 80K-120K miles on them. Make sure the car is in good mechanical condition with records if possible and use any remaining cash to pay for your insurance in front for six months to a year, which will give you an additional discount for paying upfront.

A good idea for use of the credit card, would be to use it solely for gas purchases. This would ensure that you don’t have a high bill at the end of every month, and able to pay it off easily. After about six months to a year of paying your credit card in full every month, the issuing bank will then probably double your credit line and release the $500 that you originally put down as security. You will now have an unsecured credit card with a good line of credit. At that point, your credit may be good enough that you can try to apply for another unsecured credit card, making sure that again that has no annual fee.

The reason I’m telling you this, is this is how I’ve got my life set up, and I have excellent credit score is over 800, and I am also financially secure with a good retirement savings in place. I also own three vehicles out right and no nothing on them, nor have I ever borrowed money to purchase a vehicle on credit. It is like throwing money away.

[Anonymous]

You should buy a car which is 3 years old and has low but now extremely low miles on it, the kia picanto is better suited to a single person doing young people things.

brand new they are only £10k gbp in the uk vs the £12.5k you are talking about for the forte.

But at 3 years old you aren't going to be paying anything like £10k even, more like $10k and you already have half of that.

you'll still have 75000 miles and 4 years of warranty which is more than enough to see it paid for long before time.

You dont need to build credit, you need to build no claims bonus so that your next car can be something fun before the logistics of real life deny you the chance forever, by the time you get a chance again you will be old and sensible.

So get an MX5 or similar after the kia and buy great tyres for the front, shitty tyres for the rear and smoke it up round the roundabouts whenever the po po aren't looking.

[DWornock]

The problem with badly damaged cars is that they are seldom, if ever, completely repaired. That is partly because there is hidden damage not discovered and, even more so, because the insurance company accepts a fix priced bid. Therefore, the repair shop only repairs visible damage even if they discover other damage because every repair they make costs them money. Therefore, take the money and purchase another used car for under $10,000.

Before purchasing a used car, I recommend paying a mechanic from $50 up to $100 that is not associated with the seller to do a used car inspection. When all costs and expenses are considered, it is always cheaper to drive a used car. Perhaps prior to the inspection, you can get the owner to pay for any unknown repairs the mechanic discovers. And, while in college, you need the money you save more than the prestige of driving a new car.

[codyccc]

Just be a stripper and buy a Corvette in cash 6 months in and walk out of college with 800k in cash in the bank

[Not-karen]

It’s not that easy. Definitely drop the old car.