If you (a) have in the region of $30k savings to use for a down payment and (b) want to get an installment loan to build your credit, have a look at a "savings-secured" or "share-secured" loan offered by most credit unions. $2k-$5k is enough. The big advantage is that because it is collateralized, you get a low rate like a car loan -- but without being forced into a purchase you don't want.
I actually opened one this morning, because I anticipate buying my first house in the next couple years and bought my current car with cash, so I have no open car loan and no loan in the last 9 years that would show up on my credit report in the timeframe I need. Furthermore, every score report I get from my bank says it's being dragged down by lack of installment loan information.
The one I got has an interest rate of 2.05% APY. It should cost me less than a hundred dollars in interest between now and when I apply for a mortgage, and any effect whatsoever on my mortgage rate will make up for that many times over. And with no prepayment penalty, as soon as I have a mortgage locked in and approved, I can pay off the share-secured loan and stop paying interest altogether, because appearing next to a mortgage, a small installment loan will have little or no effect.
A similar product could work well for you to build credit and unlock more favorable car loans as well as credit cards with better rewards or lower rates.
I had emailed several credit unions with questions, here is the response I got from the one I ended up choosing:
Your questions regarding Share Loans are addressed below:
- The loan term can be up to 142 months, as long as the monthly payment does
not fall below $25. The interest rate is 2% above the current dividend rate.
Currently the dividend rate on the Regular Share savings is 0.05%. The minimum
loan amount is $250.
- No credit report is pulled for Share Loans.
- The loan is reported to all three major credit bureaus.
- There are no fees to apply.
- The funds are placed on hold at loan inception and are released incrementally
each time a payment is made on the loan.
- The funds in your Regular Share account are used as collateral. Funds must
have been on deposit for 30 days or more before loan will be approved.
- There is no prepayment penalty.
- Payments in excess of the minimum due will apply towards your next due date.
You should be able to find similarly favorable terms.