Should I pay cash for a car or take out a loan and pay it back quickly?

Thanks to an inheritance I have $5,000 in my checking account right now. I need to buy a decent car. Should I open a savings account and then try to take out a four or five thousand dollar loan and pay it right back? Will this improve my credit score? Right now my credit is hovering between good and poor...mainly because I had a high ratio of debt for a few years, but that was conquered about six months ago. Now I have one negative on my credit (I owe my school about $900) the rest is all very positive, never late. Currently I owe about $600 on one card and have almost $8,000 available to me, but I want to stop using credit cards as much as possible. I wonder if I would even qualify for that loan, or would having the bank run a credit check just hurt me more at this point? I don%26#039;t want to make the mistake of paying cash if a quickly paid off loan would improve my score.

Should I pay cash for a car or take out a loan and pay it back quickly?credit cards

The first thing I would do is pay your school back and ask nicely if they%26#039;ll please take it off of your credit report.

Next thing is I%26#039;d check what you can get for a a loan rate -- shop around! The credit check hurts you slightly, but if you have all checks done within a few days it%26#039;s not enough to matter. If you can get a loan rate that%26#039;s lower than what your money would make in a CD or something else interest bearing (honestly mine is in various stocks and funds), get it and pay it back over time (and put your money in a CD or something that will make you money). CDs appear to be going up to as much as 5.5% right now.

Also pay off the credit cards first (if I had credit card debt I%26#039;d also see if the car loan rate is lower than that, because if it is it definately makes sense to pay off credit cards first!).

I got my auto loan a few months ago for a little over 5% APR...so I%26#039;m paying it back slowly even though I could pay it off. If it had been 9-12% like some people claim they are getting, there is no way I would have ever even taken the loan.

Should I pay cash for a car or take out a loan and pay it back quickly?

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many credit cards provide easy installments without interest, go for that option.|||It%26#039;s better to buy a car cash $5000.00 or less. Most banks or finance company will charge higher interest rate on that size loan most time 12% to 22% if not more. My best advise is pay the $900.00 school loan $600.00 on credit card, find a car for $3000.00 then put $500.00 in the bank for a rainy day.