Credit card to buy a car or pay off a loan?

the_indiekid

Hi - we need to get another car and I have found one for around £4000, unfortunately apart from a £200 deposit the rest will have to be funded another way.

Originally we had gone to our bank for a loan which we had no problem getting approved and were offered around £6000 at a rate of about 12% APR, (we had gone in saying that we could afford to pay £200 a month). Since then I had seen that the same bank were offering rates of 8.9% APR for loans of £7500 and over. My plan was to borrow the £7500, purchase the car for £3800 and then pay a £3700 chunk off the loan, (I have checked and there are no charges to do this and it will reduce the term of the loan).

However I then read the article on credit cards and my plan was to apply for a Tesco 12 month 0% credit card, buy the car with that, (still paying £200 a month) nd then after 12 months switch to a 0% balance transfer and continue to pay off the loan at £200 a month. The only problem is that when I have rung Tesco they say it will take 3 - 4 weeks until I get the credit card and unfortunately I don't think the car will still be there in that time.

Do I take a gamble, apply for the card and wait, hoping that if that car goes there will be similar, (I've been searching for a car for a couple of weeks and it doesn't look likely - I should have sorted my finances sooner but I was trying to convince myself we didn't need a car as at present I have just become debt free and was hoping to stay that way) or do I go for the 8.9% loan which I can get transfered into my account the next day - is there any way of paying off the loan early, (fee for this is 2 months interest), with a lower rate card at a later date or will the fees and interest not make this worthwhile?

Any advice would be appreciated - thanks

davetrousers

Get a cheaper car

naijapower

I would get the cheaper car as well

epsilondraconis

Looks like you've got the same thread on both the credit card and loans threads.

Below is my response on the loans' thread:

First thing you need to do is check with the garage that they will take the credit card as payment. You can typically pay the deposit with a credit card and possibly some of the remaining balance; however many garages won't allow the whole balance to be paid because they are incurring the additional charge from the credit card company (which is a percentage of the transaction amount).

You could perhaps look into doing a super balance transfer with a credit card of the appropriate type - this allows you to pay the money into your current account.

http://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs

Thinking about it a little more - I don't know how much the credit card companies charge as a percentage of the transaction (I believe it is approx 3%); however I guess you could say to the garage that they should add that onto the cost and you pay for it all on your credit card.

the_indiekid

Cheers for all the advice - although in an ideal world we do need a car I've decided that after recently becoming debt free, (apart from a mortgage), I don't want to have the dark lingering cloud of debt hanging over me again just yet so we're going to carry on without. Thanks for the advice - it's made me realise that there are many different ways of financing new purchases and projects and a little research can save a lot of money.