Auto Loans

Regarding several questions raised about auto loans:


I wouldn't get a car loan JUST for the purpose of obtaining credit, but if you are in need of developing your credit record, you may want to get one and pay it off early. I do not know, however, how long it takes before the loan will be reported to the bureau.


You will want a simple interest loan, rather that one which calculates payback based on the Rule of 78. Rule of 78 loans pay back mostly interest in the first part, so you may find yourself still owing much of the principal if you try to pay it off early. Try a good bank or credit union for help. I don't think most dealers offer simple interest loans directly. Dealers, by the way, buy loans at some rate (the buy rate), say 11%, then write the loan at perhaps 11.8%, so they keep the difference as profit. And don't believe the crap that credit unions don't report loans to the bureau.


If you happen to know a loan officer that you trust, ask about the time it takes for a loan to be reported to the credit bureau. I dont know. I would advise against asking for advice from the finance managers at dealers. They get paid for selling loans, alarms, paint sealers etc, and are not necessarily that knowledgeable about the mechanics of lending.

Hope it helps.