Buying a car on a credit card

digitalphase

The card in question is Barclaycard, using it's 'life of balance transfer 6.9%' option. Yes it is being transferred so that deal comes into effect

I am wondering if anyone can work out these sums for me.

To spend £5,000 on this card at 6.9% and pay the minimum payment of £125 a month, how long would it take me to pay this off? Also, what would the difference be if I paid £150 per month.

Just tossing ideas around at the moment and would appreciate someone's mathematical brain to help, until I can utilise my OH's at home time :rotfl:

BigDave81

I used the loan calculator on MSE so someone else can confirm but I made it £5000 @ 6.9% = £126 for 45 months.

And £5000 @ 6.9% = £150 for 37 months

digitalphase

Thanks very much, where did you find the calculator?
I do intend paying more than the minimum, but need to sell an asset first, then can pay more towards the car

BigDave81

http://www.moneysavingexpert.com/loans/cheap-personal-loans#calc

I just guessed the months, started at 60 and went down until payments more or less matched.

JayCee

Remember to add into your equation that the Retailer who is selling you the car, is likely to charge you an extra 2.5% (approx) for paying by Credit Card, which will be £125 for a £5,000 car. Also, when you transfer the balance to Barclays, I think they charge a 3% Transfer Fee, which would be £153.75 on top of the £5,125.

So your £5,000 car would be at £5,278.75 before you start making repayments.

1st months interest would be £5278.75 x 6.9% divided by 12 = £30.35

If you paid £125 you would start month 2 at £5278.75 + £30.35 - £125 = £5184.10

Obviously, your interest charge would reduce every month, as you are paying £125, which is more than the interest charge, so your outstanding balance would be reducing every month and hence attracting less interest.

Roughly, it would take 48 months to clear if you paid £125 per month.

digitalphase

Thanks muchly

digitalphase

JayCee wrote: »

Remember to add into your equation that the Retailer who is selling you the car, is likely to charge you an extra 2.5% (approx) for paying by Credit Card, which will be £125 for a £5,000 car. Also, when you transfer the balance to Barclays, I think they charge a 3% Transfer Fee, which would be £153.75 on top of the £5,125.

So your £5,000 car would be at £5,278.75 before you start making repayments.

1st months interest would be £5278.75 x 6.9% divided by 12 = £30.35

If you paid £125 you would start month 2 at £5278.75 + £30.35 - £125 = £5184.10

Roughly, it would take 48 months to clear if you paid £125 per month.

Thanks, we're also using Virgin to put the cash into the bank account so we can pay cash if we buy privately, or save any fees a trader adds on for using a credit card. We realise we will have to pay for two balance transfers, but this is OK. It is by far the best deal I am going to get at the moment

digitalphase

Using that calculator if I pay £154 a month I can clear it in 3 years which is much more realistic. Would probs be wanting a newer car then as my credit should be back on track then (hopefully!) And only £549 in interest, which is fine

JayCee

Good luck. I've just bought 2 new cars, so there are lots of deals going around, if you haggle.

Glad the calculator got the same answers as me. I'm old enough to have been taught how to count at school, so prefer to do it in my head.

Normally I just divide the loan amount (£5,000) by the number of months (36)

Then work out the interest (£5,000 x 6.9% x 3 years, then half it) and divide by number of months you are paying over (36).

Then add the 2 figures together and you should have your monthly payment.

The reason you half the interest is because, on a Credit Card, you will be paying most interest at the start of the loan, least at the end, but the mid point should give the average amount. If that makes sense.

digitalphase

It's nothing to do with being able to count!

I didn't ask what the monthly amount would be, I asked how many months it would take to clear the balance if I paid the minimum, and a figure over that. I know what the minimum amount is, and I want to pay over that.

Why is it not possible to ask a question and get advice from others who are better at maths than me, without getting snarky comments? :rolleyes:

Thanks for your help BigDave anyway

JayCee

Digitalphase,

Please accept my sincere apologies if I offended you, that was certainly not my intention.

Having read my comments again, I can see where you are coming from, but hopefully, you will also see that I did not intend it to be, in any way, personal.

In the first line of my post, I wished you 'Good Luck' and was trying to be friendly.

After that, it was just my misguided attempt at humour, based on taking the mickey out of my age and the fact that the younger generation are now taught at school to use calculators, rather than 'the old method of fingers and thumbs'. (I have no idea how old you are, so I was just being general).

I was also trying to be helpful in suggesting a way to work out the repayment figures manually, as you may not always have the moneysavingexpert calculator to hand.

Once again sorry if I came across the wrong way.