Buying a new car can be a significant financial decision, often met with skepticism from financial advisors due to rapid depreciation and better value in used vehicles. However, for some, the peace of mind that comes with a new car—such as factory warranties and assurance of its condition—outweighs the financial drawbacks. The author shares their experience of purchasing a new Ford Expedition at a discount while financing it at a low-interest rate. After paying off the loan early, they experienced an unexpected drop in their FICO® Score by about 10 points, which can seem counterintuitive. This decline is explained by the FICO scoring formula, where a paid-off loan becomes a closed account, negatively impacting the "amounts owed" category, along with factors like length of credit history and credit mix. Despite the score drop, the author emphasizes the benefits of eliminating monthly payments and saving on interest, highlighting that financial decisions should also consider personal peace of mind.
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