Cash or finance with Home Equity

[worldbikr]

Indicate if cash or finance buyer.

[audtatious]

Hmmmm....

If cash is directly out of a savings account (or you have that much in checking) then cash is best. You should be able to finance a new Rogue at a rate cheaper than a Home Equity loan so that does not make sense.

[Eikon]

Hmmmm....

If cash is directly out of a savings account (or you have that much in checking) then cash is best. You should be able to finance a new Rogue at a rate cheaper than a Home Equity loan so that does not make sense.

Even with a higher rate, the home equity loan may be a better idea than taking the auto financing option.

Prime just dropped to 7.5%.. which means that if you've got good credit and some equity in your house, you should be at potentially below prime with a home equity loan. If you had 6% on a car loan, and 7.5% on a home equity loan, I'd be inclined to take the home equity loan based on the tax saving you'll gain from the interest being deductable. Of course, check with your accountant or tax professional, but know that if you itemize, all mortgage interest (first or second mortgage) is written off as a deduction from your income. If you're at say a 20% tax bracket.. then the 7.5% rate effectively becomes 6%. The other advantage to a home equity loan is that you can take much longer to pay it off if you choose to. Of course the longer you take to repay, the more it winds up costing you in the end.

Anyhow.. that's your weekly advice from the resident mortgage loan officer.

[audtatious]

While true, Nissan usually has lower rates if you finance through them. The only time taking out a home Equity loan to use as a car purchase should be considered is if that rate is lower than the auto loan rate the buyer could get. Personally, through USAA (my insurance and CC carrier), their auto loan rate is in the 5% range which is lower than the current APR's for home equity loans. I know that Nissan can beat that rate by financing through them as well.

The problem with the Rogue is that it is a new model so Nissan will not be offering any great incentive APR's for potential buyers. If you are looking at another model, say an Altima 2.5 Sedan, then you can get 2.9% for a 60-month purchase.

Of course, the above is assuming perfect credit

[NeedMoreCowbell]

I pretty much followed these steps exactly:

http://transferthatbalance.com...ef9d7

Got $37K in 0% money, used 27K for the car and put the rest in a savings account (which is used to make the cc payments).

So far so good ... hope to do it again when my 0% promos expire in 12 months.

[Eikon]

Bad idea cowbell.. Your credit score has just dropped considerably.. hope you don't need to buy anything else for a while.

[NeedMoreCowbell]

Bad idea cowbell.. Your credit score has just dropped considerably.. hope you don't need to buy anything else for a while.

No offense, but don't speak of things you know nothing about.

This info is outside the scope of this forum, but my credit score was over 800 before I used this (fairly common) technique and it's still over 800 after. My aggregate % utilization is under 20%. Credit's more than fine.

[Eikon]

No offense, but don't speak of things you know nothing about.

This info is outside the scope of this forum, but my credit score was over 800 before I used this (fairly common) technique and it's still over 800 after. My aggregate % utilization is under 20%. Credit's more than fine.

I know a fair amount about credit ratings and scoring after working four years in the mortgage industry. You're right that I should not have assumed that I knew your situation exactly, and rather should have given a general warning rather than one directed at you personally. But sharing that advice here could lead many people into making poor decisions, so I felt the need to share my negative thoughts about it.

The information presented in that link talks about maxing as many 0% credit offers as possible. That is harmful to a persons credit in many ways. First it will likely lead to scoring down due to having too many consumer credit cards. Second, it will lead a person to severely harm their score by maxing out those credit lines. The balance to limit ratio will be far too high for each account and lead to a large negative affect. Yet another negative impact will be the number of recent inquiries on credit, which will once again harm your credit score.

For you personally... if you've kept each of those accounts under 20% balance to limit ratio, and you've got sufficient positive history and length of history, then perhaps it's won't have a significant impact on your credit. I hope that's the case at least.

If you've done this recently, chances are you have not yet seen the affects on your credit. The scoring is done on a monthly basis, and often takes two or more months before the full impact is known.

[audtatious]

I'd like to have a credit score over 800. My credit cards are either at 0 or <$300 ("we" have three cards, one is a simple Circuit City with 0 balance and the other two are USAA with 26k credit limits each and both have less than $300 on them). Both cars paid for. The only bill I owe is my home mortgage which is <1/5th my monthly income (not including my wifes income as an RN). Nothing is listed as even having a late payment and I have a very lengthy credit history. It's clean as hell

Kinda sux as I was expecting higher than I have. Oh well, top 2% will have to do for now.....

[NeedMoreCowbell]

I know a fair amount about credit ratings and scoring after working four years in the mortgage industry. You're right that I should not have assumed that I knew your situation exactly, and rather should have given a general warning rather than one directed at you personally. But sharing that advice here could lead many people into making poor decisions, so I felt the need to share my negative thoughts about it.

The information presented in that link talks about maxing as many 0% credit offers as possible. That is harmful to a persons credit in many ways. First it will likely lead to scoring down due to having too many consumer credit cards. Second, it will lead a person to severely harm their score by maxing out those credit lines. The balance to limit ratio will be far too high for each account and lead to a large negative affect. Yet another negative impact will be the number of recent inquiries on credit, which will once again harm your credit score.

For you personally... if you've kept each of those accounts under 20% balance to limit ratio, and you've got sufficient positive history and length of history, then perhaps it's won't have a significant impact on your credit. I hope that's the case at least.

If you've done this recently, chances are you have not yet seen the affects on your credit. The scoring is done on a monthly basis, and often takes two or more months before the full impact is known.

I don't want to turn this into a d*ck swinging contest, but I've worked at a bank for six years as a programmer and have been playing the 0% game in various degrees of refinement since after grad school. Aggregate utilization has little to do with individual utilization; aggregate implies "overall" - since I've done this for some time my overall credit lines are substantial and as such drawing out almost $40K brought me from 3% to 20%. Individual lines were drawn to 89% each; many say you can go to 99% but I play the game somewhat conservatively, which is why my score went dropped just four points, to this:

http://img89.imageshack.us/my....7.jpg

If it wasn't for the evil credit card companies that had me drowning in debt in my early 20's I wouldn't take the time to spread this info. The fact is, this strategy is one of the most troublesome trends the credit industry has seen, because unlike gamb|ing, the house will *always* lose if the user doesn't screw up payments.

Eikon, this goes against conventional thinking and most people freak when they hear about it, but if you do some research and stay clear from people that make blanket statements you'll come to the same conclusion I did. My ultimate goal is to eliminate my mtg using a massive cc blitz (15 - 20 cards at once). Others have done it successfully, and I can't wait to let Visa, MC, and the other crooks pay for my home interest free for the next few years.



Here's the disclaimer: if you pay your bills late, don't do this. You *will* get screwed and you *will* pay the crooks, bigtime.

[NeedMoreCowbell]

I'd like to have a credit score over 800. My credit cards are either at 0 or <$300 ("we" have three cards, one is a simple Circuit City with 0 balance and the other two are USAA with 26k credit limits each and both have less than $300 on them). Both cars paid for. The only bill I owe is my home mortgage which is <1/5th my monthly income (not including my wifes income as an RN). Nothing is listed as even having a late payment and I have a very lengthy credit history. It's clean as hell

Kinda sux as I was expecting higher than I have. Oh well, top 2% will have to do for now.....

Those with the highest credit scores generally thrash their credit utilization and then pay it down to a low amount. This rollercoaster effect will, in the long run, raise your score.

As sick as it sounds, if you're not a big user of credit and you have large lines (and it sounds like you're both of these), your score won't grow significantly due to very low % utilization. I put everything I possibly can on credit, McDonalds, gas, groceries, etc. etc. and always pay in full each month.

In laymen's terms, think of credit cards as the mafia (not a stretch). You approach the mob and ask to borrow 100K. If all you've borrowed from him in the past is a few hundred bucks, he'll show you the door. If you've borrowed and paid back 50K, 60K, and 70K, he'll have no problem giving you the cash.

Be it the mob or a ruthless credit card empire, both will mess you up if you stumble in paying back, whether you borrowed $100,000 or $500.

[Eikon]

I'm also definitely not interested in making this a big argument. But again, I will continue to publicly speak against this idea.

I'm not arguing with your personal results.. congrats, and more power to you. But working as a programmer at a bank hardly makes your credit expertise infallible. While I'm also not the utmost expert in credit scoring, I have analyzed hundreds / maybe thousands of credit reports and have been trained to be able to understand how the scoring systems work.

Congrats to you for maintaining an excellent credit score, and for taking advantage of theoretically fantastic loophole. If it works for you, that's fantastic, and I applaud you.

But for all others who might read this thread, please head my warning against this credit game.

I've seen people with multiple perfect credit accounts impacted more than 50 points due to maxing one single credit card. It's a very complicated equation (one that the credit reporting industry doesn't want the public to understand) and different people will have different results.

But please.. tread very carefully. I can assure you each individual account's balance to limit ratio is a factor. I can also assure you that taking out and immediately maxing out multiple new credit accounts WILL have a harmful impact on your credit. That impact may turn around in a years time. But keeping a strong credit score is invaluable in case of unexpected borrowing necessities.

Again.. Mr. Cowbell (love the name by the way.. lol). I congratulate you on your creativity.. and for your success in this venture. Please don't think I'm calling you a liar or trying to attack you in any way. I'm simply arguing my perspective on the situation based on the knowledge I possess. I appreciate that we can keep this a mature and intelligent conversation. I would invite any person reading this thread to do their own homework and arrive at their own conclusions.

as long as they know that I'm right and you are wrong.. lol.

[NeedMoreCowbell]

Last thoughts before I head to bed:

I'm not infallible but I'm when it comes to credit I'm pretty close. I worked on my previous employer's credit reporting interface and as such consider my credit knowledge "about as good as it gets" - if I can be so bold.

If maxing out one CC drops fico 50 points, that individual had a lot more negatives on their profile than just one max'd out CC. There's no way a perfect credit profile drops that much with one max'd line, I would bet every penny of my net worth on that.

The one thing I absolutely agree with is: do your homework. Generally speaking those that jump right in with a cocky attitude mess up. The empire isn't in the habit of losing money; this is not a foolproof exercise. If it were, everyone would do it and then the 0% deals would dry up.

It bears repeating:

Do your homework before attempting this

and, again:

If you're one of those people that pays bills late, or for some reason doesn't do auto-payments, don't do this, ever. One late payment = hundreds of dollars in finance charges.

And lastly, I'm always right.

[Eikon]

And lastly, I'm always right.

Well done!

Sounds like we are on the same page for the most part.. but we'll agree to disagree on some of the finer points of credit scoring.

Either way.. we've taken this thread way off topic.. lol.

Sleep well my friend!

[audtatious]

Those with the highest credit scores generally thrash their credit utilization and then pay it down to a low amount. This rollercoaster effect will, in the long run, raise your score.

The rollercoaster effect is usually to a banks advantage as they usually receive some form of payback as far as interest goes. They are in it for the money and hate people who do not keep some form of balance on their card(s). FWIW, my credit has been trashed twice due to X-wives. In '02 I was only able to obtain a $500 credit line due to how bad my credit was and I hate to know what my FICO would have been at that time. Middle of '05 I was able to get it up to a whopping 702. Around March of this year it was up to 777 and it's now up to 793. Whatever I am doing it seems that I have been doing a relatively good job with it

As sick as it sounds, if you're not a big user of credit and you have large lines (and it sounds like you're both of these), your score won't grow significantly due to very low % utilization. I put everything I possibly can on credit, McDonalds, gas, groceries, etc. etc. and always pay in full each month.

Between the wife and I we put anywhere from $2k to $4k a month on the credit cards as we are doing home improvements and I use my CC for travel expenses as well. The difference between my balance and the "rollercoaster" effect is I pay off the balance monthly as I don't want to pay a bank any form of interest charge if I don't have to. If that slows down the growth of my FICO then so be it

In laymen's terms, think of credit cards as the mafia (not a stretch). You approach the mob and ask to borrow 100K. If all you've borrowed from him in the past is a few hundred bucks, he'll show you the door. If you've borrowed and paid back 50K, 60K, and 70K, he'll have no problem giving you the cash.

I agree. My credit history shows numerous payoffs in the 100k+ range. I have had to tell my CC company to NOT increase my credit line as well since I don't need it. With just the two CC's the wife and I can charge $52k at a whim without touching any of our other investments. With FICO, I hear that is both a positive AND a negative to have huge unused credit lines available. I see no reason to even think about charging up CC's for anything at this point even though our rate is prime +0 (and I'm looking for something sub-prime to give me positioning power).

Be it the mob or a ruthless credit card empire, both will mess you up if you stumble in paying back, whether you borrowed $100,000 or $500.

The credit card empire is there to make money at the expense of the borrowers. They will take any reason they can think of to increase their rates and there is not anything you can do about it other than try to find another card to transfer funds to. If you max out a card I can guarantee most CC companies will feel they "have you over a barrel" and will raise their rates automatically in order to gather additional income regardless of your FICO. Higher rates by one company may impact rates of other cards regardless of balance and that snowball effect can/will cause your FICO to drop.

[amr40509]

As someone who doens't work in mortgages or for a bank...but owns an investment advisory firm/financial planning firm....I think I'm more then qualified to throw in my $0.02.

Don't use the home equity line to buy a car (in 95% of all cases, there are special exceptions). Think about it this way, if you have a major financial hit (like medical expense or disability), you don't want your lux. items tied to your home. You could easly lose the home in addition to the car much more easily if you got behind in your bills.

As to the rest, there is no "one size fits all" solution. I'd suggest talking to someone who isn't a product salesman and getting some obective advice.

[rsm]

so... ummm..... i'm like..... a theapist and stuff.can anyone direct me to the rogue forum?



hahaha.... i'm just kidding... this was a fun thread to read...

[audtatious]

so... ummm..... i'm like..... a theapist and stuff.

Physical or mental?

[Eikon]

or the two word version.. the rapist for $1000 Alex!

[rsm]

Mental...

Eikon.... I had to link this.... it's just too good:

http://www.youtube.com/watch?v=etmHaeaNsCw

Just a small break from credit talk and car talk. But I DID vote in the poll

[thenate1]

I for one really enjoyed this thread. Thanks everyone for sharing your knowledge and stuff.

And I am also glad that no one 'flamed' out and eveyone could keep from letting it get personal and all that. Nice work.

[audtatious]

Nah...

With an Admin and a Moderator posting, threads usually don't go butt-up