8.4: Case Study - A Possible Purchase

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Case Study

Tina would like to buy a new car. Her current car runs fine but is six years old, and she would like a new car. Currently, Tina owes $8,000 on her current car, and the car is worth $6,000. Her credit has not been great in the past due to missing credit card payments. In the last few years, Tina has worked hard to pay down debts and always pay her bills on time. Her credit score has gone from 550 to 650. Tina has a high interest rate on her current car payment due to her poor credit score in the past. She is now debating whether now is a smart time to purchase a new car.

How might Tina's credit be affected, good or bad, if she buys a new car?
How might the fact that Tina owes more on her car than her car is worth affect her credit, car payment, and interest rate?
Do you think Tina should buy a new car? Why or why not?