Help with some number crunching...

Gemmzie

OH has car finance. The current settlement figure is around £4.5k. The APR is 15.8% and it runs until September 2012. He pays around £185 a month.

I've just been offered a 0% card for 15 months with a 2.9% BT fee.

My math says that making that payment would clear the car in 21 months.

We'd aim to clear that last £1k as quickly as possible and it would then allow overpayments. Plus we'd pay a lot less interest.

Worth it?

dib-dab

I think it sounds worth it - he has approximately 31 months left to pay on the loan - a total figure of £5735 to repay.

If you transfer to a 0% interest card then the amount on the card including the fee would be £4631. My calculation shows that it would take 25 months to pay this off at £185 per month and it would save you £1104 in interest. Would you be able to make enough overpayments to clear the balance before the interest starts to be charged?

But make sure you do not use the card for anything else.

Gemmzie

I have another card which frequently offers me good LOB deals so I'd be aiming for that for the remainder. Or of course, the MSE option of paying it off before it runs out! (I do like a challenge )

dib-dab

Yeah as long as you think you can pay it off then I would go for it.

15 months worth of £185 payments comes to £2775 which would mean that you would then have £1856 remaining on the card at the end of the 15 months.

So you would either have to overpay by £124 each month for the 15 months or look at transferring that amount to another 0% card after 15 months. And if there was another 2.9% charge then the amount would be £1910 on the new card - which with £185 per month would take another 10-11 months to pay off.

So 25-26 months rather than 30-31 months and you would save almost £1100.

Yippee!