Take a loan or use a credit card?

[Artie Fufkin]

I'm possibly looking at buying a car around £6K and was going to do the usual personal loan but what if I was to put it on my credit card then get a new 0% transfer card then transfer it to another 0% transfer card next year and again for a third time? I'd get 3 years interest free credit wouldn't I?

...Or am I missing something obvious? The only thing I can think of is making yearly applications/changes might affect my credit rating.

[Iccz]

Originally Posted by Artie Fufkin

I'm possibly looking at buying a car around £6K and was going to do the usual personal loan but what if I was to put it on my credit card then get a new 0% transfer card then transfer it to another 0% transfer card next year and again for a third time? I'd get 3 years interest free credit wouldn't I?

...Or am I missing something obvious? The only thing I can think of is making yearly applications/changes might affect my credit rating.

Any chance of finance from the dealer? If you're using a dealer...
When I got my car the best option to me was finance from the dealer, they gave me a better rate than the bank i'm with.

I've never really known much about the card juggling for 0%, maybe someone else can give a bit more on that, if you can get 0% on it all until you pay it off then surely that's the way to go.

[RMCF]

You will be able to do the CC trick for 3 years assuming of course you are accepted for 3 different cards consecutively. Remember that a lot of cards are issued by the likes of MBNA so if you try to cancel one or already have one with them or issued by them, then apply for another you may get turned down.

I know plenty of people who have continually moved from 0% to 0% deal, but eventually you run out of cards.

I have heard a few car dealers giving 0% finance recently, although admittedly it was on brand new cars.

If you are sure you'll have the £6k paid off in 3yrs then the CC route is probably way to go, as long as you don;t stay on the one card and the APR goes to 14.9% or 16.9% after the 0% period expires.

Taking a loan from a bank (if you can get one) will probably be around 8%.

[krish]

its not completely interest free ... there's the balance transfer fee which I believe all or most cards charge (around 2.5-3%)

have a good read of this MSE page: Best Balance Transfers: Cut existing credit card debt costs...

[RMCF]

Originally Posted by krish

its not completely interest free ... there's the balance transfer fee which I believe all or most cards charge (around 2.5-3%)

have a good read of this MSE page: Best Balance Transfers: Cut existing credit card debt costs...

Yip he's right. Forgot about that.

It was 2.5% or £20 (whichever is greatest) on my last transfer over to my 0% CC.

For by my calcs, after year 1 you should have £4k remaining. If you transfer that your balance on your new card will be approx £4100. Also bear in mind that in these times you will probably take out protection insurance, which is a % of your balance each month. Mine appears to be around 1% of my balance, so that's another £40-ish per month !! You could not get this insurance but you'd be brave these days.

Time for you to do some calculating.

[Knyght_byte]

A lot of car dealers will add a surcharge to the price of the car if you pay by card to cover the charge they will incur from the card agency. Most shops already increase their prices because of this (strangely you dont get a discount if you pay cash..lol) but car dealers dont as most people will pay by cheque/bankers draft or direct transfer (or loan). I'd recommend you speak to some of the car dealers you are looking at using.

As for it affecting your credit rating, if you are paying off regularly and on time, it can actually do your credit rating good. My dad had only had a mortgage and consequently when he went to get a credit card it took him ages to find a company willing to do it as they all said he wasnt viable due to not having any credit history...hehe

The downside to the credit card is you pay a load of it off, then suddenly the looks of a nice shiny new TV pops in to view and you think...well, the plastics there for a reason I guess...and bingo....your hooked, they make money and your risking your financial security.

If you know you can pay off the card then cancel it, go for it. If you think you might be tempted to keep using it, get a loan

[eric pisch]

Dodgy but possible it depends on your credit rating and how the stable the banking industry gets and if they decide 0% cards are too exspensive and stop them in the future.

There are still alot of 0% cards with different company's and there are some that don't charge (they generally have shorter terms).

However the industry is aware of people who swap 0% rates and recently credit rating sites have started recording more information to show up "credit card tarts" so it may be harder to get in the future.

Dealers can have attractive APRs (allways compare apr's) so are worth checking.

The other alternative is to get a credit card with a low interest rate for the term of the loan. I believe they are around the 6% rate which is lower than just about any personal loan. The MSE site (as linked below) has info on them.

[Epicurus]

I had about £12,000 of debt which I put on an MBNA card at 0% for 13 months. I worked that down to £6000 over the last year then last month just before the 0% was due to expire I took out an EGG card which has another 0% for 12 months and put the remaining £6000 onto that. This second transaction cost me £180 and the first was around £300 I can't remember the rate. I will pay this over at a rate of £500 a month until it is all gone, then I will cancel both these cards.

There are plenty of these deals around still, but as someone said already, check who the providers are because MBNA has a lot of the market sewn up.

£500 of fees on 2 years of interest free credit for a sum of £12,000 is good business in my eyes, if you get finance on any used car now you will be looking at a minimum of 7% APR.

Also remember that if you pay for ANY of the car with your credit card, such as a £500 deposit for example, the credit card company immediately becomes liable for the worthiness of the car. So if you have any problems down the line and the dealer proves unhelpful, the card company are another avenue to pursue.

[DJT75]

Originally Posted by Epicurus

Also remember that if you pay for ANY of the car with your credit card, such as a £500 deposit for example, the credit card company immediately becomes liable for the worthiness of the car. So if you have any problems down the line and the dealer proves unhelpful, the card company are another avenue to pursue.

Never thought about that - even past the warranty period? I recently bought a 2nd hand car with a 6 month warranty, power steering knackered after 8 months so I quickly got rid of it as a part exchange for a new car, rather than a £2000 repair job...

[Epicurus]

I only realised it a week or so ago when I was chatting to a trading standards officer who was re-commissioning a petrol pump for us. As an unrelated matter I asked him for some advice on a potential problem I was having with a dealer trying to sort out a used car I'd just bought.

The conversation was actually quite enlightening, it turned out I had four avenues to pursue. There was the dealer itself under the sale of goods act, there was the aftermarket warranty provided by the dealer with the car. Those are the obvious ones.

Then there was the credit issue, he asked if I'd bought the car on finance to which the answer was yes, and he said fantastic because the finance company was now liable for the car being of satisfactory quality.

He also asked if I'd paid any by credit card, and yes I'd paid for the desposit by credit card. He said this meant the credit card company was also liable for the car being of satisfactory quality.

So as it happens, credit is not necessarily the evil thing many people make it out to be, it also provides you with substantial legal protection with purchases.

As it happens this all turned out to be irrelevant in this case because the dealer co-operated and ultimately was very good to me, but it's useful to know for the future.

But in specific relation to your problem, it's difficult to be exact with time periods, legally they are purposefully left a little vague. It will depend on the mileage of your vehicle, its age etcetera and even how much you used it since you had it. 8 months on a very old car might be considered normal wear and tear, on a car only a few years old it is probably not acceptable. Speak to consumer direct they can be very helpful. If they think it is not satisfactory then certainly you have a case with the credit card company, who will most likely put pressure on the dealer to fix it for you.