Barclaycard or Sainsburys loan

lloydr_2

Hi

I need to borrow £5000 for a car. My old car just blew up (failed MOT) and will cost more to repaire than worth trade-in, also there were loads of warnings on the MOT (faults I don't want to drive the car with and that will deffo be major by next year).

Anyways, I have two options
1. Loan from Salisbury's at 8.8% for 5 years.
2. Pay on 1 Credit card, then transfer the balance to Barclaycard (or transfer in advance), the rates they have quoted me for this are, 2.5% fee and 6.9%APR for the life of the balance.

I have never used the Barclaycard just ordered it last year looking for a 0% deal but got their other offer and forgot to cancel the card!

At the moment I'm leaning towards the Barclay card as I can pay it off a lot quicker if required, and take lower payments should anything arise. I would set up the minimum payment DD and a Standing order from My bank account to pay it off over the 5years near enough.

Does this sound sensible (Barclay card over loan?)? Please no comments on do you really need the car etc, I have had a load of stress recently with Other half and her finances that are back on track so fancied treating myself, and the car is something I have wanted for a while, I tend to keep cars till they drop (see above re: mine failing MOT which is the only reason I'm changing now).

Thanks

L

Rafter

L,

The main issue will be if you can afford the minimum payment on your credit card?

A loan over 5 years means you will be paying 1/60th of the loan off each month. The minimum payment on a credit card is usually about 2.5% or 1/40th so your initial payment will probably be 50% bigger - around £150 versus £100 on the loan.

The APR on the card over 40 months including the fee works out at 7.75% so still cheaper than the loan though if you can get a used car dealer to accept a credit card? Some may charge you a fee which might make the loan a better option?

Good luck

R.

Rob71

Keep it on plastic - I don't know the terms of the loan, but you will have more flexibility with the card (and it'll be cheaper as Rafter pointed out). You might even find a nice 0% deal in the next couple of years...