Bought a used car for about $14k cash but thinking about just taking out the career starter loan to build/diversify credit portfolio. Would it be better to:
Take out $10k at 60 months and just begin making large early payments to pay it off early (want to be done with that in about 18 months)
or
$10k at 24 months and just pay a good amount off at the beginning and then start paying normal payments (hopefully still have that paid off in about 18 months)
Credit Building with Career Starter Loan
byu/mamiyamami inMilitaryFinance
Posted by mamiyamami
2 Comments
We need more context to understand a simple question: Why are you doing this?
What’s your current credit score? Do you have credit cards open? Do you carry any current debts?
Taking the starter loan due to the extremely low interest rate is generally an excellent financial decision if you’re planning to invest it and pay it with no issues, but for building credit it depends on your current situation. It’s a personal installment loan which can help a credit score/history, but may be unnecessary for your current credit situation. But at 2.99% or lower, it’s usually financially savvy.
Taking the loan will raise your debt : income ratio, which makes your credit worthiness go **down.**
Never borrow money for the sake of building credit.
Also, raise your Roth TSP contributions to the point where you couldn’t afford these payments so you don’t ask questions about borrowing superfluous money.