Does it make more financial sense to rent a car or to buy a car? And if I’m not sure how much I will be using the car, would using a car sharing company like Zipcar make more financial sense? Also, can my credit score affect my eligibility for renting or buying a car, as it does with renting or buying a house?

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Posted by Abby Londa (MONEY FORUMS: 4, Answers: 0)
Asked on February 7, 2016 12:36 pm
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Hi Abby, I had read an interesting article a few weeks ago on how someone had used services like uber and lyft for 2 months and after calculating everything, realized that it was cheaper to use these services than using their own car. Having a car includes multiple things that you’d need to pay for monthly (loan if you took a loan for it, insurance, gas etc.) and so it really depends on how much you’ll need to use a car.
Three years ago my family had just come back into the country after leaving for about 4 years. Their credit score, which had been spotless, was now gone after this absence. We, however, needed a car to get around and so went to buy a car from the dealership. Firstly, with a bad credit score, as Hannah said, we were given a high interest rate for the loan. Secondly, buying the car and taking the loan from the same dealership was also probably not the smartest choice for interest rates. However, after two years, our credit score has grown to be much better. Everyone we knew had given the advice that paying off for a car is actually a great and fast way to help improve your credit score. I hope this helps!

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Posted by Emma He (MONEY FORUMS: 4, Answers: 5)
Answered: February 10, 2016 6:41 pm
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Never buy something unless you really need it or really want it (same goes for renting/leasing). Uber all the way unless you begin to hate it.

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Posted by Will Lipovsky (MONEY FORUMS: 0, Answers: 37)
Answered: February 8, 2016 6:53 pm
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Hi Abby, I lived in downtown Minneapolis for three years, and I averaged about 20 miles of driving per week during that entire time (most of which was accrued visiting my parents once a week which I could have done via bus). If you live in a densely populated area, you’re probably financially better off going the zipcar/public transit route.

Outside of cities though, it becomes much more reasonable to own a car. While there are different schools of thought on cheapest ways to own a car, I tend to fall in the “Buy Boring old cars, and drive them until someone crashes into you” camp. I spend around $3K per year on car maintenance, gas, insurance, taxes, licensing,etc.

As for eligibility. Most of the time renting a car is just a matter of having a license and the ability to pay. Some places require that you be at least 25 years old. If you need to take out a loan to buy a car, you’ll get a good interest rate if you have a good credit score, and a bad rate if you have a bad score. If you’re new to credit, or cleaning up past debts, I would recommend trying to get up to 680-700 before applying for a loan. (You can check your score free at AnnualCreditReport.com or via Credit Karma). Many people can get car loans for 3% or less.

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Posted by Hannah Rounds (MONEY FORUMS: 1, Answers: 54)
Answered: February 8, 2016 3:40 pm
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