This is Optimal Finance Daily, episode 1146, why I took out a car loan instead of paying cash,

by Lance Cothern with Budgets Are Sexy.com.

And I'm Dan, I'm your host and welcome back to Optimal Finance Daily.

Hope you're having a great week so far.

This is of course where I read to you from some of the best personal finance blogs on the planet.

And now I'll keep this intro nice and short for you today so let's get right to

our post as we start optimizing your life. Why I Took Out a Car Loan Instead instead of paying cash by Lance Cothern with Budgets Are Sexy.com

While I was in college I had a bit of a beater car. It was pretty clear to me that I would need to get a more reliable ride, but the thing

was I didn't want a car loan. So what did I do? I saved like crazy to have enough money to pay for a

newer used car all in cash. I ended up having to save my money from

college gigs and a ton of money from my first post-college job too. Once I finally had enough money

saved up, I decided to start shopping for my car.

This whole time, I thought I'd be buying a used one, but instead I ended up coming up with some

solid reasons not to buy a used car, and in the end I changed my mind. So what did I get? A brand-spanken new 2010 Honda Civic.

And while I could have paid for it all in cash, I took out a car loan instead.

What? Yep, I took out a loan.

And here's why.

I needed an installment loan on my credit.

One factor of your credit score is the types of credit you have held.

This only accounts for 10% of your score, but it's still an important

factor. The types of credit include mortgage loans, revolving credit, credit cards,

auto loans, and student loans. I had just recently graduated from college and was extremely lucky in the fact that I didn't have to take out any student loans.

...