Credit card as a car loan

coin_2

Hi guys, I hope I can get a bit of advise from the experts.

I'm debt free and want to buy a car for around 10,000 pounds. Having read through this website all about balance transfers I'm wondering if I can use a 0% offer as a free loan ;D

Now I ve figured out I can afford 300 pound repayment each month so if interest free would be paid off in 34 months.

I already have a sainsburys credit card with a limit of 2,000 pounds which I use for purchases.

Now I guess my question is a bit of which came first the chicken or the egg. To do a balance transfer do you apply for a card first or do you already need the debt? really what I saying I dont want to buy a car then find out when I apply for (a egg crad for example) they only give me 5,000 credit limit, if you get my drift.

Any advise would be welcome

Martinslovechild

I've done this with both mine & my wife's cars. The advice I can give you is as follows.

1. I started off by applying for a Cahoot Flexible Loan.
2. I applied for an Egg Card.
3. If you don't have enough credit limit, then apply for an MBNA-affiliated card (e.g. MBNA/Virgin/A&L etc).
4. BT the entire amount from Egg into your Flexible Loan account.
5. BT the rest of the cash needed from MBNA to the Flexible Loan to get you up to the £10K required.

Approximately a month or so before the expiry of each 0% deal, you'll need to apply for another card. Hopefully, after 9 months, you'll owe £7300 and you'll be able to move the debt onto one card. If not, you'll need 2 more cards.

I haven't paid any interest apart from month #1 when we were waiting for the cards to come through.

coin_2

Thanks for the quick response

Now I assume step 6 is atually buy the car once you have 10,000 in the flexable loan account.

But why have the flexable loan account at all, is it just easier to manage or does it make it easier to balance transfer the money. Little confused ???

Martinslovechild

OK, that's because we paid for the car straight away with the cash in the flexible loan account. At that point in time, I was a little wet under the collar and it didn't click until about a fortnight later that we could move the loan onto 0% cards.

If you haven't purchased the car yet, or there's no immediate hurry, then cut out the flexi loan and go straight for the 0% cards, transferring the cash instead directly to your current account, from where you can then write a cheque or pay by switch/delta.

Be aware that there are very few cards which will allow you to pay money directly into your current account in this way. These cards are what Martin refers to as Super Balance Transfer (SBT) cards. Another one is Mint (Spend 'n' Save cheques). With most other cards, you'll need to move the BT through Egg and then onto your current account.

Also, MBNA may charge you a 2% fee (usually capped at either £35 or £50 or even uncapped in some cases, it depends on the T&C's). It's still worth doing though.

carl310166

I have been reading this post with interest as i would like to do a similar thing,but

I already have a car loan of about 14k.
I have just been accepted for an egg at 4.5k limit.
I could SBT 4.5k into my current account.
I could clear the egg with my MBNA at a very low% rate.

Could i then repeat the process with the egg another twice and get 13.5k on the MBNA?

Is this how to do it? or am i missing something?

Reaper

Yes you can. By passing money through Egg you can get money from any card to your bank account. This trick is heavily used by stoozers so that we can get 0% money off lots of 0% credit cards.

Have a read of the articles on the main site or for a detailed guide see https://www.stoozing.com

carl310166

Thats good news!

Martinslovechild

Carl,

It's really easy to do.

Good luck.

MLC.

t_i_g_e_rr

Has anyone paid for a car with a credit card directly? My thinking being, if I get an American Express card with 2% cashback I will get £260 cashback on £13000 (plus about £15 at greasypalm). I have read that some garages charge a surcharge for using a credit card. Has anyone any experience with this?

Walletwatch

Am sure all posters have factored this in, but is it not a risk to take, as one big assumption being made here is that the 0% offers will be available for posterity (or at least till the time you decide is enough for you to pay off based on what you can afford every month, to illustrate, the 34 months which the OP has mentioned in his first post)

Of course, if you have the principal ready in hand to cover the eventuality of no more credit being available, it is fine, else one would end up paying even higher interest on a credit card debt, as compared to a car loan.

Reaper

Credit cards and car purchases don't mix. A garage is likely to ask you to pay 2-3% extra for a credit card to cover the extra fees it will cost them. It has been suggested you could negotiate with them to absorb the fees, but frankly if they are willing to waive them that just means you haven't negotiated properly in the first place.