What should I do with my $5,000 (pay credit card or use as a down payment)?

Question

I am in the need of different vehicle in a few months. I am looking to buy a vehicle for around $10,000. Currently I have $8,000 in credit card debt on a limit of $11,000. I have $5,000 saved up in my bank account. What would be my best option. Use the $5,000 for a down payment on a car, or pay off $5,000 of credit card debt and take out a full loan on the car? My credit score is fair at 672.

Update:

The remainder of the $5000 car loan would be paid off after I sell my Firebird. I live up north where the winters are brutal. No more bumming rides when a blizzard hits. I need a 4x4.

rpf5 · Accepted Answer

Using it to get a car gives you car payments plus the credit card debt.  Can you afford to have both?  You already have enough credit card debt to buy a car.  That would scare me.   There are no guarantees you will get 5k for that firebird or that they will approve you for that loan due to existing debt.  You have more debt then savings.

 My advice;  Either sell car first or use it as a trade in & buy something that gives you no debt.  Then concentrate on paying off that credit card before it over loads your budget.   You are on the road to a money crisis per your current spending.   Need proof;  Look at your last statement & see how much you spent in interest charges, or worse, did you only pay the minimum amount due.   Time to pay down that bill.

Go with the flow · Answer

Gosh, do you need more debt in your life?  A car loan?
Can't you just do with what you have?  Fix it?
You should not have any credit card debt.  
That only lowers credit scores and costs you money in interest.

Did you know that 35% of cars are bought in cash?
There is a whole world of people out there that you don't know about.
Be one of them !
Living a life of debt is a horrible life.  Strangles your future.

? · Answer

if you already have reliable transportation... id say pay off the credit card debt while you have the chance.I mean, why make another bill ( car note ) if you are already in debt. you may not have another chance to pay off the card. id do it now

Mr. Muffin · Answer

Pay credit card bill.

What should I do with my $5,000 (pay credit card or use as a down payment)?

4 Answers