@commonsenseanswer, I recently purchased a used car from a new car dealer (it was a trade-in).
After finalizing the price, I offered to pay with a certified check, but they said a personal check would suffice.
I suspect that while I was haggling over the price, they were checking my credit and determined that I was “good for it”
I Just Happen To Believe That “Buying” A Car And Then Making Payments On It Is Backwards. I Have Accounts Where I Regularly Deposit Money Over A Several Year Period. When I Want A Car Then The Money In The Account Pays For It.
It’s the timing - paying after you take delivery - or - paying before you take delivery. The cars still cost the same amount. I like to own my stuff. I pay and then take it.
My 25 year-old son, however, put a large down payment on a new car (he could have paid cash) and financed some at a couple of percent interest. He wanted to build a credit rating and will pay it off quickly.
CSA
Well the bank that gave me that advice I no longer do business with. Maybe it was just their policy but I though that is was a dumb one. After they put my account on the internet the second time without my permission, we were done.
Having a high limit on your credit cards does not in any way hurt your credit rating. The credit agencies aren’t stupid. They know banks push limits up. One of the most important figures used for calculating your credit rating is the percentage of your available credit that you actually owe. I have two cards at 25k and owe nothing. My credit rating is sky high.
Well not exactly. Even if you own nothing on the high buck cards, the fact that the credit is available still counts against you. So you have 50K in short term credit available and owe nothing, tomorrow you could access the entire 50K. So to some extent it counts against you. But generally who cares as long as your credit is good and has no bearing on things like insurance premiums. I’ve never been concerned about it and just paid my bills and never been turned down. If anyone ever did turn me down it would be their loss and I’d never do business with them again.
Per the credit bureaus themselves, normal card limits don’t hurt your FICO score. It’s a fairly simple formula, which is why the bureaus also sell their own more sophisticated ratings. For FICO, actual debt matters, and the ratio of debt to available credit. Owing $9000 on a $10000 card is worse than owing $9000 on a $15000 card. The first suggests you may be living beyond your means. The first does not. They don’t know what your income and expenses are, just your credit history. My partner’s FICO score went up when he got a line-of-credit he never used. Of course, that action shows up on a credit report and would concern a potential lender. He did get asked questions about it.
The agencies know banks are upping the limits, not the customers. If a cardholder did request an increase, that no doubt would have an effect.
Having a high limit on your credit cards does not in any way hurt your credit rating.
Sorry…but your wrong. The credit bureaus only report your credit…they do NOT loan you the money.
Twice it came up as a red flag when I refinanced my homes. But the bank discounted it because it was a refinance and because of our income. Wife and each have our own Visa’s with a $5k limit…which we pay off every month. Plus I have a Visa from Hess that I use just for gas purchases ($2k limit). And we have a Discovery with a $5k limit.
One banker told is…ANY thing over $10k gets flagged. Doesn’t mean you can’t get the loan…just that more information will need to be gathered.
“Having a high limit on your credit cards does not in any way hurt your credit rating.”
I have to agree with that–as long as one does not typically utilize too much of that credit, and as long as you have a good payment history.
I just added up the limits on my credit cards (2 Mastercards, 1 Visa, 2 Amex), and my total credit limit is $66,500. And yet, my FICO score is 825, which is only 25 points away from the maximum.
The real answer, I believe, is that your credit score is based on how much of your available credit you actually utilize, as well as your history of payments. In my case, I usually have monthly credit card charges of ~$2,000-$2,500, and I pay the bills in full each month.
So, even though I have very high credit limits on my charge cards, I utilize less than 4% of that available credit. That factor, coupled with my payment history, is what yields a very high FICO score.
Not all dealerships are out to steal your money. Some are equipped to take credit cards, some smaller ones are not. I don’t know any small dealers who have check readers/scanners. Most around here will take a personal check, although cash or a cashier’s check are better. Hey, if you write a rubber check for over $100 it’s a felony. NO one wants that on their record. Besides, the dealer can repo the car if the check bounces. It’s the law.
I would suggest that you put a deposit down to hold the car while you go to the bank for your money. Put that amount in the contract, which they will be happy to write. Dealers do that all the time. Expect a time limit on how long they’ll hold it, but a day or two is not uncommon. You may find that the dealer is willing to give you a good discount for green folding cash. Not that I would say he’s unscrupulous, but cash can sometimes be hidden from the IRS. You should mention that you are willing to pay cash during your negotiations. Don’t bring up why that may be good for him. He knows.
I bought my current car at a dealership just outside the Baltimore beltway with a personal check.
No problem.
I did show the salesman my driver’s license before the test drive.
Yes, VDC, your situation is the same as mine, and my FICO is 830. Few people have any higher scores, so clearly our credit card limits are not harming our credit ratings. FICO uses a fairly simple formula, with credit utilization one of the largest factors.
That's the bank flagging it. That has nothing whatsoever to do with your credit rating, only with how comfortable the bank feels with you as a risk.
Who said anything about credit rating?? I never did. What I said is that having a high credit card limit can hurt you in getting a loan. Which is true. Never said one word about credit rating. As I pointed out…a high credit card limit home bank lenders consider that as potential debt. And they take that into consideration when lending you money. If you’re income is on the edge for getting approved to buy a particular home then having a $10k credit card limit MAY push you over the edge and you’ll be turned down for the loan.
Although I am not a fan of the Ramsey fella who gives financial advice on the radio, I do agree with his opinion that credit ratings are “over rated.” I have never known what my rating was and not knowing it has never seemed to inconvenience me. But Ramsey seems to have read the book I never wrote and plagiarized me quite a bit. Avoiding debt has seemed much preferable to seeking it out. Once found, debt usually traps the borrower. I have always been somewhat frugal and unsophisticated regarding finance, though. I sleep better at night not worrying about the line scrolling across the screen under Cramer.
the sad part is is that some places will look at your credit score while they read your resume.
MG, aren’t there Federal Laws which require any business to fill out certain paperwork for the agencies which are supposed to watch for drug money laundering, on large cash purchases? I am not sure, but I think so.
See http://accounting.smartpros.com/x69467.xml for form which is required to be filed by the dealer for cash purchases over $10,000. Also by banks.
In fact, reading that article, I’d say Form 8300 filing requirements may be why some now require a certified check, or something other than cash.
the sad part is is that some places will look at your credit score while they read your resume.
That’s very common these days. In fact I do it. All potential candidates that I hire are screened by a service we hire. They check the person for accuracy in their resume, along with criminal background check, credit rating. This is told the the candidate up-front. They have every right to decline this background…in which case we deny hiring them. It doesn’t mean that if you have a credit problem that we won’t hire you. But if I see someone who’s been constantly evicted from their home or apartment or a pattern of bad credit over many years it poses a red flag. I had one such candidate just a year ago. I then called her up to have her explain it to me. She was going through a very very bad divorce and custody battle. She even gave me her lawyers # to verify. She’s been working for me for over a year now and is an excellent employee.
See http://accounting.smartpros.com/x69467.xml for form which is required to be filed by the dealer for cash purchases over $10,000.
@irlandes–I brought a cashier’s check to the Chevrolet dealer for the agreed on purchase price for the 2006 Uplander that I purchased in the summer of 2006. I had the vehicle about 2 days and the business office at the dealership said that I had to give them my social security number. I questioned that because I paid cash. They showed me the federal law requiring the social security number on any amount over $10,000. However, back in 2010, I purchased a new 2011 Sienna from the Toyota dealer. I wrote them a personal check for the amount and that closed the deal. They didn’t ask for my SS number even though I think it is the law.
The only drugs I deal in are Smith Brothers Licorice cough drops which aren’t available in drugs stores in my region, so I have to obtain them on the black market.
The IRS web site description for form 8300 mentions cash and cashier’s checks, not personal checks, and says that paying with a personal check doesn’t trigger the federal reporting requirement.
Funny, like I said I bought two new cars in the last year. Both were settled with cashiers checks for the balance, well over $20k each. And there’s no way I let them do any credit checks or surrender my SSN when I’m paying cash. Never had anyone come back looking for more info.
Personally, even if they took cash (which none that I know of will do because of the extra work for them), I would not feel comfortable transporting $25,000+. A cashiers check fits in my pocket and if lost or stolen can be recovered…