Purchase charges

Simoncbevans

This may be called something else and I may be repeating another thread, but here goes.

I would like to buy a car using new credit cards. The dealer is OK with that but tells me he would be charged 1.5% (ie. £300 in this case) which he would have to pass on to me. I have no reason to doubt him. Is there any way around this charge apart from just getting a standard loan instead?

latecomer

Its common for these charges to be passed on. Either pay the charges or go for a loan.

Moggles_2

Have you considered a balance transfer card, such as Virgin?

Virgin is one of a handful of cards which will allow you to transfer an overdraft to them, (in other words, transfer cash from the credit card to your current account), at balance transfer rates. A 2.98% BT fee applies, but there are no other charges during the introductory 0% period, which lasts15 months.

You then have funds in your current account with which to pay for your car.

NickX

In this case actually I think I would go with the dealer's offer of 1.5% but make sure you use a nice long 0% purchases card.

Moggles is quite correct in that you could use Egg or MBNA to Super Balance Transfer the funds to your Bank Account to pay for the car. But this will incur a fee of 2.98% or 3% and this is more than the fee that the Car Dealer is asking.

One other option that springs to mind, but it is only a 6 month deal is the Virgin Atlantic White American Express card which offers 0% on Super Balance Transfers for 6 months and the fee is capped to £50.

If you could get a £20k Credit Limit on this one (and they are generous with credit limits) then you would only pay £50 for a 6 month 0% deal, which is a nice 0.25% fee. However this is probably only a good idea if you can pay much of the debt off within a 6 month period, otherwsie you will be looking to transfer at the end of the 6 months anyway.

nomoneytoday

Haggle £300 off with the dealer
I doubt he will want to lose a deal for £300...

Simoncbevans

NickX

Thanks for this advice. The Virgin card route looks promising. One reason I did not want a straight loan is that I expect to pay off about half the debt early on and I wanted the flexibility to do that without incurring charges or being locked in to a pre-set monthly repayment.

I intended to open two new credit card accounts, a 0% one for the short term loan and a low interest one for the long term loan. So perhaps at least one of these should be the Virgin card. Much depends on what credit limit I will be allowed. My credit rating is "excellent" and I qualify for some black cards so in theory even a £20k credit limit should be no problem. But you can't know without applying and it takes up to 72 hours for processing. We shall see.

NickX wrote: »

In this case actually I think I would go with the dealer's offer of 1.5% but make sure you use a nice long 0% purchases card.

Moggles is quite correct in that you could use Egg or MBNA to Super Balance Transfer the funds to your Bank Account to pay for the car. But this will incur a fee of 2.98% or 3% and this is more than the fee that the Car Dealer is asking.

One other option that springs to mind, but it is only a 6 month deal is the Virgin Atlantic White American Express card which offers 0% on Super Balance Transfers for 6 months and the fee is capped to £50.

If you could get a £20k Credit Limit on this one (and they are generous with credit limits) then you would only pay £50 for a 6 month 0% deal, which is a nice 0.25% fee. However this is probably only a good idea if you can pay much of the debt off within a 6 month period, otherwsie you will be looking to transfer at the end of the 6 months anyway.

NickX

Simoncbevans wrote: »

My credit rating is "excellent" and I qualify for some black cards so in theory even a £20k credit limit should be no problem.

That sounds promising. It is important that you get the right Virgin card, this is specific Virgin Atlantic card. Here is a link :

https://wwwa.applyonlinenow.com/UKCCapp/Ctl/entry?sc=8VAAwhiteaf_ost&mc=VAA-RS-52527-53389

It is one of the best short term deals around because they will transfer up to 95% of your Credit Limit straight to your bank account, but you will have to request this during your card activation call.

If you don't get the full £20k limit, for instance lets say they give you £10k, then you could still use that £10k to pay for the car, but pay the rest on a 0% Purchases card, and at least the car dealers fee will come down to £150 as you are only paying half on the Credit Card. This is still saving £100 over the full fee.

Simoncbevans

NickX

Thanks for the link. What effect does the 2% "handling charge" (mentioned soon after the 0% interest rate) have on all this?

YorkshireBoy

Simoncbevans wrote: »

What effect does the 2% "handling charge" (mentioned soon after the 0% interest rate) have on all this?

A negligible one! It'll cost you £50 to borrow £20K for 6 months.

Don't forget they'll want a £5 per month minimum payment. Hopefully it won't stretch you too far.

Simoncbevans

YorkshireBoy

The £50 has been mentioned before so I must be very dim. Surely 2% of £20k is £400? I must be missing something here. Isn't this a one off charge, regardless of length of borrowing? Bear with my stupidity!

And yes, I guess I can afford the fiver a month.

YorkshireBoy wrote: »

A negligible one! It'll cost you £50 to borrow £20K for 6 months.

Don't forget they'll want a £5 per month minimum payment. Hopefully it won't stretch you too far.

YorkshireBoy

Simoncbevans wrote: »

I must be missing something here.

What you're missing is a read of the summary box and the T&C's - not just the 'features' page Nick linked to.

If you read the summary box and T&C's you'll see the wonderful words...

"Balance Transfers: 2% (min £3, max £50)"


Always read the small print.