Credit card or car finance?

brazenskies

Hi all,

I'm buying a new car this week and I need to finance about £4500 of it.

I was wondering if it would be a better idea to take out a credit card for this finance or to take the finance offered by the dealer. I'm being offered a base rate of 6.9% from the dealer, which I imagine will work out about 13/14% APR.

This is what I'm thinking at the moment of the benefits of getting a CC for this...

• I can pay off as much as I want, when I want
• I have found cards with a purchase rate of around 8% APR variable
• I have a perfect credit score, never missed a payment in my life
• Chances of missing a payment are slim to none.

Obviously, I don't know of the pitfalls in doing it this way so any advice is greatly appreciated!

Thanks,
Greg

bingy_burge

Have you asked the dealer the fee you will inccur doing it on a card??? Some won't at all?

brazenskies

I've not actually. I'm due to speak to him this afternoon so I'll ask.

Anything else I should be watching out for at the CC providers end?

no_cally_doe

Another option might be tesco personal loan, think the APR is around 7.9%. If you are strict then CC isn't a bad option if there isn't a fee.

Paying off as much as you want can also turn into paying as little as you want. Just playing devils advocate

djm1972

2% fee for credit card payment when I just bought my new car on a Tesco credit card (0% APR on purchases for 12 months), potentially absorbed by the value of clubcard points received and the interest earned on my savings for 12 months whilst paying minimum payment.

I could have paid cash but didn't want give-up ISA entitlement which over time will be worth much more than the credit card fee paid. The dealer said that he had lots of customers doing similar things - his 2% fee being cheaper than the card's balance transfer fee.